
 



 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-K
 
☒ ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended February 29, 2024 
 
☐ TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ______ to ______
 
Commission File No. 814-00732
 
SARATOGA INVESTMENT CORP.
(Exact name of registrant as specified in its
charter)
 
  Maryland   20-8700615  (State or other jurisdiction of
incorporation or organization)   (I.R.S. Employer
Identification Number) 
 
535 Madison Avenue
New York, New York 10022
(Address of principal executive offices)
 
(212) 906-7800
(Registrant’s telephone number, including
area code)
 
Securities registered pursuant to Section 12(b)
of the Act:
 
  Title of each class   Trading Symbol(s)   Name of each exchange
on which registered  Common Stock, par value $0.001 per share   SAR   The New York Stock Exchange  6.00% Notes due 2027   SAT   The New York Stock Exchange  8.00% Notes due 2027   SAJ   The New York Stock Exchange  8.125% Notes due 2027   SAY   The New York Stock Exchange  8.50% Notes due 2027   SAZ   The New York Stock Exchange 
 
Securities registered pursuant to Section 12(g)
of the Act: None
 
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
 
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
 
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days: Yes ☒ No ☐
 
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐
 
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
  Large accelerated filer  ☐ Accelerated filer  ☐  Non-accelerated filer  ☒ Smaller reporting company  ☐      Emerging growth company  ☐ 
 
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
 
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
 
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
 
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
 
The aggregate market value of the voting and non-voting
common stock held by non-affiliates of the registrant as of August 31, 2023 was approximately $271.2 million based upon a closing price
of $25.85 reported for such date by the New York Stock Exchange.
 
The number of outstanding common
shares of the registrant as of May 3, 2024 was 13,698,966.
 

 
 


 
 

 
NOTE ABOUT REFERENCES
 
In this Annual Report on Form 10-K (the “Annual
Report”), the “Company,” “we,” “us” and “our” refer to Saratoga Investment Corp.
and its wholly owned subsidiaries, Saratoga Investment Funding LLC, Saratoga Investment Funding II LLC, Saratoga Investment Corp. SBIC
LP, Saratoga Investment Corp. SBIC II LP, and Saratoga Investment Corp. SBIC III LP, unless the context otherwise requires. We refer
to Saratoga Investment Advisors, LLC, our investment adviser, as “Saratoga Investment Advisors,” the “Investment Adviser”
or the “Manager.”
 
NOTE ABOUT FORWARD-LOOKING STATEMENTS 
 
Some of the statements in
this Annual Report constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections,
future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts.
In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,”
“could,” “estimate,” “expect,” “intend,” “may,” “plan,”
“potential,” “project,” “should,” “will” and “would” or the negative of
these terms or other comparable terminology.
 
We have based the forward-looking statements included
in this Annual Report information available to us on the date of this Annual Report, and we assume no obligation to update any such forward-looking
statements. Actual results could differ materially from those anticipated in our forward-looking statements, and future results could
differ materially from historical performance. We undertake no obligation to revise or update any forward-looking statements occurring
after the date of this Annual Report, whether as a result of new information, future events or otherwise, unless required by law or SEC
rule or regulation. You are advised to consult any additional disclosures that we may make directly to you or through reports that we
in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form
8-K.
 
The forward-looking statements contained in this
Annual Report involve risks and uncertainties, including statements as to:
 


 
●
our future operating results;

 

●the
introduction, withdrawal, success and timing of business initiatives and strategies;

 

●changes
in political, economic or industry conditions, the interest rate environment or financial and capital markets, which could result in
changes in the value of our assets;

 

●the
relative and absolute investment performance and operations of our Manager;

 

●the
impact of increased competition;

 

●our
ability to turn potential investment opportunities into transactions and thereafter into completed and successful investments;

 

●the
unfavorable resolution of any future legal proceedings;

 

●our
business prospects and the operational and financial performance of our portfolio companies, including their ability to achieve our respective
objectives as a result of the current economic conditions caused by, among other things, elevated levels of inflation, and a rising interest
rate environment, and the effects of the disruptions caused thereby on our ability to continue to effectively manage our business;

 


i
 

 

●the
impact of investments that we expect to make and future acquisitions and divestitures;

 

●our
contractual arrangements and relationships with third parties;

 

●the
dependence of our future success on the general economy and its impact on the industries in which we invest;

 

●the
ability of our portfolio companies to achieve their objectives;

 

●our
expected financings and investments;

 

●our
regulatory structure and tax treatment, including our ability to operate as a business development company (“BDC”), or to
operate our small business investment company (“SBIC”) subsidiaries, and to continue to qualify to be taxed as a regulated
investment company (“RIC”);

 

●the
adequacy of our cash resources and working capital;

 

●the
timing of cash flows, if any, from the operations of our portfolio companies;

 

●the
impact of interest rate volatility, including the replacement of LIBOR with alternative reference rates, on our results, particularly
because we use leverage as part of our investment strategy;

 

●the
impact of supply chain constraints and labor difficulties on our portfolio companies and the global economy;

 

●the
elevated level of inflation, and its impact on our portfolio companies and on the industries in which we invest;

 

●the
impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating
to us or our Manager;

 

●the
impact of changes to tax legislation and, generally, our tax position;

 

●our
ability to access capital and any future financings by us;

 

●the
ability of our Manager to attract and retain highly talented professionals; and

 

●the
ability of our Manager to locate suitable investments for us and to monitor and effectively administer our investments.

 
Although we believe that the assumptions on which
these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the
forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate
new loans and investments, borrowing costs and levels of profitability and the availability of additional capital. In light of these
and other uncertainties, the inclusion of a projection or forward-looking statement in this Annual Report should not be regarded as a
representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described in “Risk
Factors” in this Annual Report under Item 1A. You should not place undue reliance on these forward-looking statements, which apply
only as of the date of this Annual Report. 
 


ii
 

 


PART
    I
 

Item
    1. Business
1

Item
    1A. Risk Factors
28

Item
    1B. Unresolved Staff Comments
63

Item
    1C. Cybersecurity
63

Item
    2. Properties
63

Item
    3. Legal Proceedings
63

Item
    4. Mine Safety Disclosures
63

 
 

PART
    II
 

Item
    5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
64

Item
    6. [Reserved]
71

Item
    7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
71

Item
    7A. Quantitative and Qualitative Disclosures About Market Risk
114

Item
    8. Consolidated Financial Statements and Supplementary Data
115

Item
    9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
115

Item
    9A. Controls and Procedures
115

Item
    9B. Other Information
116

Item
    9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
116

 
 

PART
    III
 

Item
    10. Directors, Executive Officers and Corporate Governance
117

Item
    11. Executive Compensation
119

Item
    12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
120

Item
    13. Certain Relationships and Related Transactions, and Director Independence
121

Item
    14. Principal Accounting Fees and Services
122

 
 

PART
    IV
 

Item
    15. Exhibits, Consolidated Financial Statement Schedules
123

Item
    16. Form 10-K Summary
127

 
 

Signatures
128

 

iii
 

 
PART I
 
ITEM 1. BUSINESS 
 
General
 
We are a specialty finance company that provides
customized financing solutions to U.S middle-market businesses. Our investment objective is to create attractive risk-adjusted returns
by generating current income and long-term capital appreciation from our investments. We primarily invest in senior and unitranche leveraged
loans and mezzanine debt and, to a lesser extent, equity issued by private U.S. middle-market companies, which we define as companies
having annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) of between $2 million and $50 million,
both through direct lending and through participation in loan syndicates. Our investments generally provide financing for change of ownership
transactions, strategic acquisitions, recapitalizations, and growth initiatives in partnership with business owners, management teams
and financial sponsors. Our investment activities are externally managed and advised by Saratoga Investment Advisors, LLC, a New York-based
investment firm affiliated with Saratoga Partners, a middle-market private equity investment firm.
 
Our portfolio is comprised primarily of investments
in leveraged loans issued by middle-market companies. Leveraged loans are generally senior debt instruments that rank ahead of subordinated
debt with below investment grade or “junk” ratings or, if not rated, would be rated below investment grade or “junk”
and, as a result, carry a higher risk of default. Leveraged loans also have the benefit of security interests on the assets of the portfolio
company, which may rank ahead of, or be junior to, other security interests. Term loans are loans that do not allow the borrowers to repay
all or a portion of the loans prior to maturity and then re-borrow such repaid amounts under the loan again. We also invest in mezzanine
debt and make equity investments in middle-market companies. Mezzanine debt is typically unsecured and subordinated to senior debt of
the portfolio company.
 
While our primary focus is to generate current
income and capital appreciation from our debt and equity investments in middle-market companies, we may invest up to 30.0% of our portfolio
in opportunistic investments in order to seek to enhance returns to stockholders. Such investments may include investments in distressed
debt, including securities of companies in bankruptcy, foreign debt, private equity, securities of public companies that are not thinly
traded, joint ventures and structured finance vehicles such as collateralized loan obligation funds. Although we have no current intention
to do so, to the extent we invest in private equity funds, we will limit our investments in entities that are excluded from the definition
of “investment company” under Section 3(c)(1) or Section 3(c)(7) of Investment Company Act of 1940, as amended (“1940
Act”), which includes private equity funds, to no more than 15% of our net assets.
 
As of February 29, 2024, we had total assets
of $1,191.2 million and investments in 55 portfolio companies, excluding an investment in the subordinated notes of one collateralized
loan obligation fund, Saratoga Investment Corp. CLO 2013-1, Ltd. (“Saratoga CLO”), which had a fair value of $9.5 million
as of February 29, 2024, investments in the Class F-2-R-3 Note of the Saratoga CLO which as of February 29, 2024 had a fair value of
$8.9 million, and investments in the Saratoga Senior Loan Fund I JV LLC (“SLF JV”) and its subsidiaries, a joint venture
which as of February 29, 2024 had a fair value of $25.2  million. The overall portfolio composition as of February 29, 2024 consisted
of 85.7% of first lien term loans, 1.6% of second lien term loans, 1.4% of unsecured loans, 2.7% of structured finance securities and
8.6% of equity interests. As of February 29, 2024, the weighted average yield on all of our investments, including our investment in
the subordinated notes of Saratoga CLO and Class F-2-R-3 Note was approximately 11.4%. The weighted average yield of our investments
is not the same as a return on investment for our stockholders and, among other things, is calculated before the payment of our fees
and expenses. As of February 29, 2024, our total return based on market value was -3.92% and our total return based on net asset value
(“NAV”) per share was 4.20%. As of February 28, 2023, our total return based on market value was 10.35% and our total return
based on NAV was 9.46%. Total return based on market value is the change in the ending market value of the Company’s common stock
plus dividends distributed during the period assuming participation in the Company’s dividend reinvestment plan divided by the
beginning market value of the Company’s common stock. Total return based on NAV is the change in ending NAV per share plus dividends
distributed per share paid during the period assuming participation in the Company’s dividend reinvestment plan divided by the
beginning NAV per share. While total return based on NAV and total return based on market value reflect fund expenses, they do not reflect
any sales load that may be paid by investors. As of February 29, 2024, approximately 99.4% of our first lien debt investments were fully
collateralized in the sense that the portfolio companies in which we held such investments had an enterprise value or our investment
had an asset coverage equal to or greater than the principal amount of the related debt investment. The Company uses enterprise value
to assess the level of collateralization of its portfolio companies. The enterprise value of a portfolio company is determined by analyzing
various factors, including EBITDA, cash flows from operations less capital expenditures and other pertinent factors, such as recent offers
to purchase a portfolio company’s securities or other liquidation events. As a result, while we consider a portfolio company to
be collateralized if its enterprise value exceeds the amount of our loan, we do not hold tangible assets as collateral in our portfolio
companies that we would obtain in the event of a default. Our investment in the subordinated notes of Saratoga CLO represents a first
loss position in a portfolio that, at February 29, 2024, was composed of $640.8 million in aggregate principal amount of predominantly
senior secured first lien term loans. A first loss position means that we will suffer the first economic losses if losses are incurred
on loans held by the Saratoga CLO. As a result, this investment is subject to unique risks. See Part I. Item 1A. “Risk Factors—Our
investment in Saratoga CLO constitutes a leveraged investment in a portfolio of subordinated notes representing the lowest-rated securities
issued by a pool of predominantly senior secured first lien term loans and is subject to additional risks and volatility. All losses
in the pool of loans will be borne by our subordinated notes and only after the value of our subordinated notes is reduced to zero will
the higher-rated notes issued by the pool bear any losses.”
 


1
 

 
We are an externally managed, closed-end, non-diversified
management investment company that has elected to be regulated as a business development company (“BDC”) under the 1940 Act.
As a BDC, we are required to comply with various regulatory requirements, including limitations on our use of debt. We finance our investments
through borrowings. However, as a BDC, we are only generally allowed to borrow amounts such that our asset coverage, as defined in the
1940 Act, equals at least 200% after such borrowing, or 150% if we obtain the required approvals from our directors who are not “interested
persons” (as defined in Section 2(a)(19) of the 1940 Act) of the Company (“independent directors”) and/or stockholders.
On April 16, 2018, our board of directors, including, a majority of our independent directors, approved of us becoming subject to a minimum
asset coverage ratio of 150% under Sections 18(a)(1) and 18(a)(2) of the 1940 Act. The 150% asset coverage ratio became effective on
April 16, 2019.
 
We have elected to be treated for U.S. federal
income tax purposes as a regulated investment company (“RIC”), under Subchapter M of the Internal Revenue Code of 1986, as
amended (the “Code”). As a RIC, we generally will not be subject to U.S. federal income tax on any net ordinary income or
capital gains that we timely distribute to our stockholders if we meet certain source-of-income, annual distribution and asset diversification
requirements.
 
In addition, we have had three wholly owned subsidiaries
that are each licensed as a small business investment company (“SBIC”) and regulated by the Small Business Administration
(“SBA”). On March 28, 2012, our wholly owned subsidiary, Saratoga Investment Corp. SBIC LP (“SBIC LP”), received
an SBIC license from the Small Business Administration (the “SBA”). On August 14, 2019, our wholly owned subsidiary, Saratoga
Investment Corp. SBIC II LP (“SBIC II LP”), also received an SBIC license from the SBA. On September 29, 2022, our wholly
owned subsidiary, Saratoga Investment Corp. SBIC III LP (“SBIC III LP” and, together with SBIC LP and SBIC II LP, the “SBIC
Subsidiaries”), also received an SBIC license from the SBA, which provides up to $175.0 million in additional long-term capital
in the form of SBA-guaranteed debentures. As a result, Saratoga’s SBA relationship increased from $325.0 million to $350.0 million
of committed capital. For two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0
million. Our wholly owned SBIC Subsidiaries are able to borrow funds from the SBA against the SBIC’s regulatory capital (which
generally approximates equity capital in the respective SBIC) and is subject to customary regulatory requirements, including, but not
limited to, periodic examination by the SBA. Following the debentures being fully repaid to the SBA, SBIC LP surrendered its license
on January 3, 2024, providing the Company access to all undistributed capital of SBIC LP, and SBIC LP subsequently merged with and into
the Company. See “Item 1. Business—Small Business Investment Company Regulations.”
 
We received exemptive relief from the U.S. Securities
and Exchange Commission (the “SEC”) to permit us to exclude the senior securities issued by the SBIC Subsidiaries from the
definition of senior securities in the asset coverage requirement under the 1940 Act. This allows the Company increased flexibility under
the asset coverage requirement by permitting it to borrow up to $350.0 million more than it would otherwise be able to absent the receipt
of this exemptive relief.
 
The Company has established wholly owned
subsidiaries, SIA-AAP, Inc., SIA-ARC, Inc., SIA-Avionte, Inc., SIA-AX, Inc., SIA-G4, Inc., SIA-GH, Inc., SIA-MAC, Inc., SIA-MDP,
Inc., SIA-PP Inc., SIA-SZ, Inc., SIA-TG, Inc., SIA-TT, Inc., SIA-Vector, Inc. and SIA-VR, Inc., which are structured as Delaware
entities that are treated as corporations for U.S. federal income tax purposes and are intended to facilitate the Company’s
compliance with the requirements to be treated as a RIC under the Code by holding equity or equity-like investments in portfolio
companies organized as limited liability companies, or LLCs (or other forms of pass through entities). These entities are
consolidated for accounting purposes but are not consolidated for U.S. federal income tax purposes and may incur U.S. federal income
tax expenses as a result of their ownership of portfolio companies. In February 2022, SIA-GH, Inc., SIA-TT Inc. and SIA-VR, Inc. was
liquidated following the sale of equity held by each of the portfolio companies and will be dissolved following the end of the entity’s indemnification period. 
 


2
 

 
On October 26, 2021, the Company and TJHA JV I LLC (“TJHA”)
entered into a Limited Liability Company Agreement (the “LLC Agreement”) to co-manage SLF JV. SLF JV is invested in Saratoga
Investment Corp Senior Loan Fund 2021-1 Ltd (“SLF 2021”), which is a wholly owned subsidiary of SLF JV. SLF 2021 was formed
for the purpose of making investments in a diversified portfolio of broadly syndicated first lien and second lien term loans or bonds
in the primary and secondary markets. The Company and TJHA have equal voting interest on all material decisions with respect to SLF JV,
including those involving its investment portfolio, and equal control of corporate governance. No management fee is charged to SLF JV
as control and management of SLF JV is shared equally. The Company and TJHA have committed to provide up to a combined $50.0 million of
financing to SLF JV through cash contributions, with the Company providing $43.75 million and TJHA providing $6.25 million, resulting
in an 87.5% and 12.5% ownership between the two parties. The financing is issued in the form of an unsecured note and equity. The unsecured
note will pay a fixed rate of 10.0% per annum and is due and payable in full on October 20, 2033. As of February 29, 2024, the Company
and TJHA’s investment in SLF JV consisted of an unsecured note of $17.6 million and $2.5 million, respectively; and membership interest
of $17.6 million and $2.5 million, respectively. For the year ended February 29, 2024, the Company earned $1.8 million of interest income
related to SLF JV, which is included in interest income. SLF JV’s initial investment in SLF 2022 was in the form of an unsecured
loan. The unsecured loan paid a floating rate of LIBOR plus 7.00% per annum and was due and payable in full on June 9, 2023. The unsecured
loan was repaid in full on October 28, 2022, as part of the CLO closing. The Company has determined that SLF JV is an investment company
under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial
Services—Investment Companies; however, in accordance with such guidance the Company will generally not consolidate its investment
in a company other than a wholly owned investment company subsidiary. SLF JV is not a wholly owned investment company subsidiary as the
Company and TJHA each have an equal 50% voting interest in SLF JV and thus neither party has a controlling financial interest. Furthermore,
ASC Topic 810, Consolidation, concludes that in a joint venture where both members have equal decision-making authority, it is
not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, the Company does not consolidate
SLF JV.
  
Corporate Information
 
We commenced operations, at the time known as
GSC Investment Corp., on March 23, 2007 and completed an initial public offering of shares of common stock on March 28, 2007. Prior to
July 30, 2010, we were externally managed and advised by GSCP (NJ), L.P., an entity affiliated with GSC Group, Inc. In connection with
the consummation of a recapitalization transaction on July 30, 2010, we engaged Saratoga Investment Advisors to replace GSCP (NJ), L.P.
as our investment adviser and changed our name to Saratoga Investment Corp.
 
Our corporate offices are located at 535 Madison
Avenue, New York, New York 10022. Our telephone number is (212) 906-7800. We maintain a website on the Internet at www.saratogainvestmentcorp.com.
Information contained on our website is not incorporated by reference into this Annual Report, and you should not consider that information
to be part of this Annual Report.
 
Saratoga Investment Advisors
 
General
 
Our Investment Adviser was formed in 2010 as
a Delaware limited liability company and became our investment adviser in July 2010. Our Investment Adviser is led by four principals,
Christian L. Oberbeck, Michael J. Grisius, Thomas V. Inglesby, and Charles G. Phillips, with 36, 34, 37 and 27 years of experience in
leveraged finance, respectively, and the Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary, Henri J. Steenkamp,
who has 25 years of experience in financial services and leveraged finance. Our Investment Adviser is affiliated with Saratoga Partners,
a middle-market private equity investment firm. Saratoga Partners was established in 1984 to be the middle-market private investment
arm of Dillon Read & Co. Inc. and has been independent of Dillon Read & Co. Inc. and its successor entity, SBC Warburg Dillon
Read, since 1998. Saratoga Partners has a 35-year history of private investments in middle-market companies and focuses on public and
private equity, preferred stock, and senior and mezzanine debt investments.
 


3
 

 
Our Relationship with Saratoga Investment Advisors
 
We utilize the personnel, infrastructure, relationships
and experience of Saratoga Investment Advisors to enhance the growth of our business. We currently have no employees and each of our
executive officers is also an officer of Saratoga Investment Advisors.
 
We have entered into an investment advisory and
management agreement (the “Management Agreement”) with Saratoga Investment Advisors. Pursuant to the 1940 Act, the initial
term of the Management Agreement was for two years from its effective date of July 30, 2010, and will remain in effect on a year-to-year
basis if approved annually at an in-person meeting of the board of directors, a majority of whom must be independent directors. Most
recently, our board of directors approved the renewal of the Management Agreement for an additional one-year term at an in-person meeting
held on July 6, 2023. Pursuant to the Management Agreement, Saratoga Investment Advisors implements our business strategy on a day-to-day
basis and performs certain services for us under the direction of our board of directors. Saratoga Investment Advisors is responsible
for, among other duties, performing all of our day-to-day functions, determining investment criteria, sourcing, analyzing and executing
investment transactions, asset sales, financings and performing asset management duties.
 
Saratoga Investment Advisors has formed an investment
committee to advise and consult with its senior management team with respect to our investment policies, investment portfolio holdings,
financing and leveraging strategies and investment guidelines. We believe that the collective experience of the investment committee
members across a variety of fixed income asset classes will benefit us. The investment committee must unanimously approve all investments
in excess of $1.0 million made by us. In addition, all sales of our investments must be approved by all four of our investment committee
members. The current members of the investment committee are Messrs. Oberbeck, Grisius, Inglesby, and Phillips.
 
We have also entered into a separate Administration
Agreement (the “Administration Agreement”) with Saratoga Investment Advisors pursuant to which Saratoga Investment Advisors
furnishes us with office facilities, equipment and clerical, bookkeeping and record keeping services. The Administration Agreement has
an initial term of two years from its effective date of July 30, 2010, and will remain in effect on a year-to-year basis, subject to
annual approval by our board of directors, a majority of whom must be our independent directors. Most recently, on July 6, 2023, our
board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the
cap on the payment or reimbursement of expenses by the Company from $3.275 million to $4.3 million effective August 1, 2023. Under the
Administration Agreement, Saratoga Investment Advisors also performs, or oversees the performance of our required administrative services,
which include, among other things, being responsible for the financial records which we are required to maintain, preparing reports for
our stockholders and reports required to be filed with the SEC. Payments under the Administration Agreement will be equal to an amount
based upon the allocable portion of Saratoga Investment Advisors’ overhead in performing its obligations under the Administration
Agreement, including rent and the allocable portion of the cost of our officers and their respective staffs relating to the performance
of services under the Administration Agreement.
 
Investments
 
Our portfolio is comprised primarily of investments
in leveraged loans (both first and second lien term loans) issued by middle-market companies. Investments in middle-market companies
are generally less liquid than equivalent investments in companies with larger capitalizations. These investments are sourced in both
the primary and secondary markets through a network of relationships with commercial and investment banks, commercial finance companies
and financial sponsors. The leveraged loans that we purchase are generally used to finance buyouts, strategic acquisitions, growth initiatives,
recapitalizations and other types of transactions. Leveraged loans are generally senior debt instruments that rank ahead of subordinated
debt which are invested by companies with below investment grade or “junk” ratings or, if not rated, would be rated below
investment grade or “junk” and, as a result, carry a higher risk of default. Leveraged loans also have the benefit of security
interests on the assets of the portfolio company, which may rank ahead of, or be junior to, other security interests. For a discussion
of the risks pertaining to our secured investments, see Part I. Item 1A. “Risk Factors—Our investments may be risky, and
you could lose all or part of your investment.”
 


4
 

 
As part of our long-term strategy, we also invest
in mezzanine debt and make equity investments in middle-market companies. Mezzanine debt is typically unsecured and subordinated to senior
debt of the portfolio company. See Part I. Item 1A. “Risk Factors—If we make unsecured debt investments, we may lack adequate
protection in the event our portfolio companies become distressed or insolvent and will likely experience a lower recovery than more
senior debtholders in the event our portfolio companies default on their indebtedness.”
 
Substantially all of the debt investments held in our portfolio hold
a non-investment grade rating by one or more rating agencies or, if not rated, would be rated below investment grade if rated, which are
often referred to as “junk.” As of February 29, 2024, 77.8% of our debt portfolio at fair value consisted of debt securities
for which issuers were not required to make principal payments until the maturity of such debt securities, which could result in a substantial
loss to us if such issuers are unable to refinance or repay their debt at maturity. Such “interest-only” loans are structured
such that the borrower makes only interest payments throughout the life of the loan and makes a large, “balloon payment” at
the end of the loan term. The ability of a borrower to make or refinance a balloon payment may be affected by a number of factors, including
the financial condition of the borrower, prevailing economic conditions, higher interest rates, and collateral values. If the interest-only
loan borrower is unable to make or refinance a balloon payment, we may experience greater losses than if the loan were structured as amortizing.
As of February 29, 2024, 19.7% of our interest-only loans provided for contractual PIK interest, which represents contractual interest
added to a loan balance and due at the end of such loan’s term, and 49.6% of such investments elected to pay a portion of interest
due in PIK. In addition, 99.5% of our debt investments at February 29, 2024, had variable interest rates that reset periodically based
on benchmarks such as BSBY, SOFR and the prime rate. As a result, significant increases in such benchmarks in the future may make it more
difficult for these borrowers to service their obligations under the debt investments that we hold.
 
As a BDC, we are required to comply with certain
regulatory requirements. For instance, as a BDC, we may not acquire any assets other than “qualifying assets” as specified
in the 1940 Act unless, at the time of and after giving effect to such acquisition, at least 70% of our total assets are qualifying assets.
See “Business—Business Development Company Regulations – Qualifying Assets.”
 
While our primary focus is to generate current
income and capital appreciation from our debt and equity investments in middle-market companies, we may invest up to 30.0% of the portfolio
in opportunistic investments in order to seek to enhance returns to stockholders. Such investments may include investments in distressed
debt, private equity, securities of public companies that are not thinly traded, joint ventures and structured finance vehicles such
as collateralized loan obligation funds. Although we have no current intention to do so, to the extent we invest in private equity funds,
we will limit our investments in entities that are excluded from the definition of “investment company” under Section 3(c)(1)
or Section 3(c)(7) of the 1940 Act, which includes private equity funds, to no more than 15% of its net assets.
 
Leveraged loans
 
Our leveraged loan portfolio is comprised primarily
of first lien and second lien term loans. First lien term loans are secured by a first priority perfected security interest on all or
substantially all of the assets of the borrower and typically include a first priority pledge of the capital stock of the borrower. First
lien term loans hold a first priority with regard to right of payment. Generally, first lien term loans offer floating rate interest
payments, have a stated maturity of five to seven years, and have a fixed amortization schedule. First lien term loans generally have
restrictive financial and negative covenants. Second lien term loans are secured by a second priority perfected security interest on
all or substantially all of the assets of the borrower and typically include a second priority pledge of the capital stock of the borrower.
Second lien term loans hold a second priority with regard to right of payment. Second lien term loans offer either floating rate or fixed
rate interest payments, generally have a stated maturity of five to eight years and may or may not have a fixed amortization schedule.
Second lien term loans that do not have fixed amortization schedules require payment of the principal amount of the loan upon the maturity
date of the loan. Second lien term loans have less restrictive financial and negative covenants than those that govern first lien term
loans.
 


5
 

 
Mezzanine debt
 
Mezzanine debt usually ranks subordinate in priority
of payment to senior debt and is often unsecured. However, mezzanine debt ranks senior to common and preferred equity in a borrowers’
capital structure. Mezzanine debt typically has fixed rate interest payments and a stated maturity of six to eight years and does not
have fixed amortization schedules.
 
In some cases, our debt investments may provide
for a portion of the interest payable to be payment-in-kind interest (“PIK”). To the extent interest is PIK, it will be payable
through the increase of the principal amount of the obligation by the amount of interest due on the then-outstanding aggregate principal
amount of such obligation.
 
Equity Investments
 
Equity investments may consist of preferred equity
that is expected to pay dividends on a current basis in the form of cash or additional equity or preferred equity that does not pay current
dividends. Preferred equity at times may also have PIK interest payable. Preferred equity generally has a preference over common equity
as to distributions on liquidation and dividends. In some cases, we may acquire common equity. In general, our equity investments are
not control-oriented investments and we expect that in many cases we will acquire equity securities as part of a group of private equity
investors in which we are not the lead investor.
 
Opportunistic Investments
 
Opportunistic investments may include investments
in distressed debt, which may include securities of companies in bankruptcy, debt and equity securities of public companies that are
not thinly traded, emerging market debt, structured finance vehicles such as collateralized loan obligation funds and debt of middle-market
companies located outside the United States. See Note 4 and Note 5 for more information about Saratoga CLO and SLF JV and SLF 2022.
 
On January 22, 2008, GSC Group, Inc., as asset
manager, with Lehman Brothers raising the financing, entered into a collateral management agreement with Saratoga CLO. Saratoga CLO was
structured with five tranches of debt, plus residual notes. Saratoga CLO’s five tranches of debt were purchased by a wide variety
of CLO debt market participants. In addition, we purchased for $30.0 million all of the outstanding subordinated notes of Saratoga CLO.
 
Pursuant to its terms, the investment period
for Saratoga CLO ended in January 2013, and certain restrictions in such terms limited portfolio reinvestment. As a result, the Company
determined that it was in its best interest to refinance Saratoga CLO given its investment attractiveness, and has refinanced this multiple
times since then. The Company did not originate any of the loan assets included in the formation of Saratoga CLO, nor has it done so
since the subsequent refinancing transactions. Moreover, the Company does not expect to originate any of the loans in the Saratoga CLO
portfolio prospectively. The Company has from time to time co-invested in loans with the Saratoga CLO. The Company currently has no co-investments
between it and Saratoga CLO.
 
With respect to our advisory services to Saratoga
CLO, and in particular the underwriting standards used when determining which investments qualify for inclusion in the Saratoga CLO,
they are substantially similar to the process employed in selecting the Company’s investments. All of the credit metrics for a
Saratoga CLO investment are reviewed and documented in the same manner as they would be for an investment for the Company, with some
minor differences. For example, the Saratoga CLO investment process also includes multiple rating agency review and analysis of the loan
investment and the assigned corporate ratings, which typically does not apply to a prospective investment of the Company. Lastly, a Saratoga
CLO investment also considers the likely secondary liquidity of the loan in considering the investment, whereas the Company’s investments
are generally illiquid.
 


6
 

 
The Saratoga CLO investment period was initially
refinanced in October 2013 and its reinvestment period extended to October 2016. On November 15, 2016, we completed a second refinancing
of the Saratoga CLO with its reinvestment period extended to October 2018. On December 14, 2018, we completed a third refinancing and
upsize of the Saratoga CLO (the “2013-1 Reset CLO Notes”). This refinancing, among other things, extended the non-call
period and reinvestment period to January 20, 2020 and January 20, 2021, respectively, and extended its legal final date to January 20,
2030. Following this refinancing, the Saratoga CLO portfolio increased from approximately $300.0 million in aggregate principal amount
to approximately $500.0 million of predominantly senior secured first lien term loans. As part of the refinancing of its liabilities,
we also purchased $2.5 million in aggregate principal amount of the Class F-R-2 and $7.5 million aggregate principal amount of the Class
G-R-2 notes tranches of the Saratoga CLO at par, with a coupon of LIBOR plus 8.75% and LIBOR plus 10.00%, respectively. We also redeemed
our existing $4.5 million aggregate principal amount of the Class F Notes tranche of the Saratoga CLO at par. The Class F-R-2 Notes and
Class G-R-2 Notes tranches are the seventh and eighth tranches in the capital structure of Saratoga CLO and are subordinated to the other
debt classes of Saratoga CLO, respectively. The Class F-R-2 and Class G-R-2 tranches are senior to the subordinated notes, which is effectively
the equity position in Saratoga CLO. As a result, the other tranches of debt in Saratoga CLO rank ahead of the $2.5 million Class F-R-2
tranche and $7.5 million Class G-R-2 tranche and ahead of the aggregate principal amount of our position in the subordinated notes, with
respect to priority of payments in the event of a default or a liquidation. We also purchased an aggregate principal amount of $39.5
million of subordinated notes, which is in addition to the $30.0 million of subordinated notes issued in 2013 that were reset with an
extended legal final date to January 20, 2030. Following the refinancing, Saratoga Investment Corp. owns 100% of the Class F-R-2, Class
G-R-2 and the subordinated notes of the Saratoga CLO. On February 11, 2020, we entered into an unsecured loan agreement (“CLO 2013-1 Warehouse
2 Loan”) with Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd (“CLO 2013-1 Warehouse 2”),
a wholly owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse 2 may borrow from time to time up to $20.0 million
from the Company in order to provide capital necessary to support warehouse activities. On October 23, 2020, the CLO 2013-1 Warehouse
2 Loan was increased to $25.0 million availability, which was immediately fully drawn. The interest rate was also amended to be based
on a pricing grid, starting at an annual rate of 3M USD LIBOR + 4.46%. On February 26, 2021, the Company completed the fourth refinancing
of the Saratoga CLO. This refinancing, among other things, extended the Saratoga CLO reinvestment period to April 2024, and extended
its legal maturity to April 2033. A non-call period ending February 2022 was also added. In addition, and as part of the refinancing,
the Saratoga CLO has also been upsized from $500 million in assets to approximately $650 million. As part of this refinancing
and upsizing, the Company invested an additional $14.0 million in all of the newly issued subordinated notes of the Saratoga CLO,
and purchased $17.9 million in aggregate principal amount of the Class F-R-3 Notes tranche at par. Concurrently,
the existing $2.5 million of Class F-R-2 Notes, $7.5 million of Class G-R-2 Notes and $25.0 million CLO 2013-1 Warehouse
2 Loan were repaid. The Company also paid $2.6 million of transaction costs related to the refinancing and upsizing on behalf of
the Saratoga CLO, to be reimbursed from future equity distributions. On August 9, 2021, the Company exchanged its existing $17.9 million
Class F-R-3 Notes for $8.5 million Class F-1-R-3 Notes and $9.4 million Class F-2-R-3 Notes at par. On August 11, 2021, the Company sold
its Class F-1-R-3 Notes to third parties, resulting in a realized loss of $0.1 million. At August 31, 2021, the outstanding receivable
of $2.6 million was repaid in full. After the current end of the reinvestment period in April 2024, the Company continues to consider
refinancing the Saratoga CLO, subject to market conditions. A refinancing transaction entails finding existing and new investors that
are willing to provide debt financing to Saratoga CLO which extends the investment period of the CLO on terms that are acceptable to
it and in an amount sufficient to allow it to repay all of its existing debt holders. Prior to refinancing Saratoga CLO’s indebtedness
after, Saratoga CLO will be required to use investment repayments by portfolio companies received after April 2024 to repay its outstanding
indebtedness.
   
At February 29, 2024, the aggregate fair value
of our investments in Saratoga Investment Corp. CLO 2013-1 F-2-R-3 Notes and subordinated notes of the Saratoga CLO was $8.9 million
and $9.5 million, respectively.
 
The terms of the subordinated notes of Saratoga
CLO entitles the Company to the residual net interest income in Saratoga CLO, which is paid on a quarterly basis after payment of all
expenses, assuming that the Saratoga CLO remains in compliance with its various debt and rating agency compliance tests. The Company’s
investment in the subordinated notes of Saratoga CLO can be sold or transferred at any time. The Company has held 100% of the subordinated
notes of Saratoga CLO since the inception of Saratoga CLO.
 
Generally, the interests of the holders of the
various classes of securities issued by the Saratoga CLO are aligned with the interests of the Company as holder of the subordinated
notes. The investors in the various debt tranches of the securities issued by the Saratoga CLO are interested in the regular payment
of interest income from the Saratoga CLO and the overcollateralization of the underlying loan assets relative to the Saratoga CLO debt
issued. On the other hand, the subordinated note holders might prefer purchasing higher yielding riskier assets that could increase returns
while the returns of the holders of the debt securities remain unchanged.
 


7
 

 
With respect to the collateral management agreement
that the Company has entered into with Saratoga CLO, while the agreement is similar to the investment advisory and management agreement
between the Company and Saratoga Investment Advisors in that it is an asset management agreement, there are material differences between
the two. For example, pursuant to Section 15 of the 1940 Act, the Management Agreement with Saratoga Investment Advisors has an initial
term of two years, with annual renewals to be approved at an in-person meeting of the Company’s board of directors. The contract
can be terminated by the Company’s board of directors or stockholders with 60 days’ notice, with no penalty for termination.
The collateral management agreement that the Company has entered into with Saratoga CLO, on the other hand, has no renewal requirement.
The Saratoga CLO collateral management agreement may be terminated for cause at the direction of a majority of the most senior class
of the Saratoga CLO securities then outstanding, excluding any securities held by the Company or any affiliate thereof or any other entity
over which the Company or an affiliate thereof has discretionary authority over voting such securities, which securities are disregarded
for this purpose. If the Saratoga CLO collateral management agreement is terminated, the manager remains in place until a new manager
is appointed by the issuer at the direction of either (i) a majority of the Saratoga CLO subordinated notes, and not rejected by a majority
of the most senior class of CLO securities then outstanding, or (ii)  a majority of the most senior class of CLO securities then
outstanding, and not rejected by a majority of the Saratoga CLO subordinated notes, in each case within 20 days of notice of a vote regarding
the successor manager. If no successor investment manager shall have been appointed within 120 days after the date of notice of resignation
by the investment manager, the resigning investment manager, a majority of the controlling class or a majority of the subordinated notes
may petition any court of competent jurisdiction for the appointment of a successor investment manager without the approval of the holders
of the notes. We receive a base management fee of 0.10% per annum and a subordinated management fee of 0.40% per annum of the outstanding
principal amount of Saratoga CLO’s assets, paid quarterly to the extent of available proceeds. Prior to the second refinancing
and the issuance of the 2013-1 Amended CLO Notes, we received a base management fee of 0.25% per annum and a subordinated management
fee of 0.25% per annum of the outstanding principal amount of Saratoga CLO’s assets, paid quarterly to the extent of available
proceeds. Following the third refinancing and the issuance of the 2013-1 Reset CLO Notes on December 14, 2018, we are no longer entitled
to an incentive management fee equal to 20.0% of excess cash flow to the extent the Saratoga CLO subordinated notes receive an internal
rate of return paid in cash equal to or greater than 12.0%.
 
The securities issued by the Saratoga CLO do
not have any external credit enhancement features that would minimize the potential losses to the subordinated notes. Saratoga CLO recognized
realized losses on extinguishment of debt of approximately $3.0 million, $1.2 million, $6.1 million and $3.4 million in the fiscal years
ended February 28, 2021, February 28, 2019, February 28, 2017 and February 28, 2014, respectively, related to the February 2021, December
2018, November 2016 and October 2013 refinancing, primarily as a result of repurchasing securities at par at the refinancing that was
previously issued at a discount, as well as the acceleration of the amortization of the legal and accounting costs associated with the
refinancing. The cost of the refinancing was effectively borne by the Company as the holder of the subordinated notes in Saratoga CLO.
The indenture for the Saratoga CLO contemplates the issuance of additional securities from time to time, pursuant to an amendment to
the indenture and subject to various requirements and conditions, including the consent of the Company (in its capacity as investment
manager) and the consent of the of the holders of a majority of the subordinated notes (all of which are held by the Company) and, except
in certain limited circumstances, the consent of the holders of a majority (by principal amount) the Class A-1 Notes. The Saratoga CLO
could also issue additional securities pursuant to a refinancing of the existing securities. The costs of any such future refinancing
would effectively be borne by the Company as the holder of the subordinated notes in Saratoga CLO. On August 9, 2021, the Company exchanged
its existing $17.9 million Class F-R-3 Notes for $8.5 million Class F-1-R-3 Notes and $9.4 million Class F-2-R-3 Notes at par. On August
11, 2021, the Company sold its Class F-1-R-3 Notes to third parties, resulting in a realized loss of $0.1 million.
 
The Company does not believe that any representations
or warranties made by the Company as manager of Saratoga CLO or investor in the subordinated notes could materially affect the Company.
However, because the Company acts as the collateral manager to Saratoga CLO, it may be subject to claims by third-party investors in
Saratoga CLO for alleged or actual negligent acts, errors or omissions or breach of fiduciary duties committed in the scope of performing
its services as the collateral manager.
 


8
 

 
As of February 29, 2024, the Saratoga CLO portfolio
consisted of $640.8 million in aggregate principal amount of primarily senior secured first lien term loans. At February 29, 2024, 94.8%
of the Saratoga CLO portfolio consisted of such loans to 347 borrowers with an average exposure to each borrower of $1.8 million. The
weighted average maturity of the portfolio is 4.07 years. In addition, Saratoga CLO held $12.1 million in cash at February 29, 2024.
Our investments in the Saratoga CLO falls into our 30% “bucket” of non-qualifying assets under the 1940 Act and currently
has an aggregate cost basis of approximately $32.3 million, which is net of all principal payments made by Saratoga CLO on the Company’s
total investment in the subordinate notes of Saratoga CLO is $57.8 which consists of additional investments of $30 million in January
2008, $13.8 million in December 2018 and $14.0 million in February 2021.

 
On October 26, 2021, the Company and TJHA JV I LLC entered into
the LLC Agreement to co-manage SLF JV. SLF JV is a joint venture that invests in the debt or equity interests of collateralized loan
obligations, loans, notes and other debt instruments. As of February 29, 2024, the Company has membership interests with a fair value
of $9.4 million and an unsecured loan with a fair value of $15.8 million in the SLF JV, and an investment in the Class E notes of the
SLF JV’s wholly owned CLO (“SLF 2022”) with a fair value of $12.3 million. As of February 29, 2024, the SLF JV has an
investment in the subordinated debt of SLF 2022 with a fair value of $30.7 million.
 
Prospective portfolio company characteristics
 
Our Investment Adviser generally selects portfolio companies
with one or more of the following characteristics:
 

●a
history of generating stable earnings and strong free cash flow;

 

●well-constructed
balance sheets with the ability to withstand industry cycles, supported by sustainable enterprise values;

 

●reasonable
debt-to-cash flow multiples;

 

●exceptional
management with meaningful stake;

 

●industry
leadership with competitive advantages and sustainable market shares and growth prospects in attractive and healthy sectors; and

 

●capital
structures that provide appropriate terms and reasonable covenants.

 
Investment selection
 
In managing us, Saratoga Investment Advisors
employs the same investment philosophy and portfolio management methodologies used by Saratoga Partners. Through this investment selection
process, based on quantitative and qualitative analysis, Saratoga Investment Advisors seeks to identify portfolio companies with superior
fundamental risk-reward profiles and strong, defensible business franchises with the goal of minimizing principal losses while maximizing
risk-adjusted returns. Saratoga Investment Advisors’ investment process emphasizes the following:
 

●bottom-up,
company-specific research and analysis;

 

●capital
preservation, low volatility and minimization of downside risk; and

 

●investing
with experienced management teams that hold meaningful equity ownership in their businesses.

 
Our Investment Adviser’s investment process
generally includes the following steps:
 

●Initial
screening. A brief analysis identifies the investment opportunity and reviews the merits of the transaction. The initial screening memorandum
provides a brief description of the company, its industry, competitive position, capital structure, financials, equity sponsor and deal
economics. If the deal is determined to be attractive by the senior members of the deal team, the opportunity is fully analyzed.

 


9
 

 


 
●
Full analysis. A full analysis includes:

 

●Business
and Industry analysis—a review of the company’s business position, competitive dynamics within its industry, cost and growth
drivers and technological and geographic factors. Business and industry research often includes meetings with industry experts, consultants,
other investors, customers and competitors.

 

●Company
analysis—a review of the company’s historical financial performance, future projections, cash flow characteristics, balance
sheet strength, liquidation value, legal, financial and accounting risks, contingent liabilities, market share analysis and growth prospects.

 

●Structural/security
analysis—a thorough legal document analysis including but not limited to an assessment of financial and negative covenants, events
of default, enforceability of liens and voting rights.

 


 
●
Approval of the investment committee. The investment
    is then presented to the investment committee for approval. The investment committee must unanimously approve all investments in
    excess of $1 million made by us. In addition, all sales of our investments must be approved by all four of our investment committee
    members. The members of our investment committee are Christian L. Oberbeck, Michael J. Grisius, Thomas V. Inglesby, and Charles G.
    Phillips.

 
Investment structure
 
In general, our Investment Adviser intends to
select investments with financial covenants and terms that reduce leverage over time, thereby enhancing credit quality. These methods
include:
 

●maintenance
leverage covenants requiring a decreasing ratio of debt to cash flow;

 

●maintenance
cash flow covenants requiring an increasing ratio of cash flow to the sum of interest expense and capital expenditures; and

 

●debt
incurrence prohibitions, limiting a company’s ability to re-lever.

 
In addition, limitations on asset sales and capital
expenditures should prevent a company from changing the nature of its business or capitalization without our consent.
 
Our Investment Adviser seeks, where appropriate,
to limit the downside potential of our investments by:
 

●requiring
a total return on our investments (including both interest and potential equity appreciation) that compensates us for credit risk;

 

●requiring
companies to use a portion of their excess cash flow to repay debt;

 

●selecting
investments with covenants that incorporate call protection as part of the investment structure; and

 

●selecting
investments with affirmative and negative covenants, default penalties, lien protection, change of control provisions and board rights,
including either observation or participation rights.

 


10
 

 
Valuation process
 
We account for our investments at fair value
in accordance with FASB ASC Topic 820, Fair Value Measurement (“ASC 820”), as determined in good faith using written
policies and procedures adopted by our board of directors. Investments for which market quotations are readily available are recorded
in our consolidated financial statements at such market quotations subject to any decision by our board of directors to approve a fair
value determination to reflect significant events affecting the value of these investments. We value investments for which market quotations
are not readily available at fair value as determined in good faith by our board of directors based on input from Saratoga Investment
Advisors, our audit committee and an independent valuation firm engaged by our board of directors. We use multiple techniques for determining
fair value based on the nature of the investment and experience with those types of investments and specific portfolio companies. The
selections of the valuation techniques and the inputs and assumptions used within those techniques often require subjective judgements
and estimates. These techniques include market comparables, discounted cash flows and enterprise value waterfalls. Fair value is best
expressed as a range of values from which the Company determines a single best estimate. The types of inputs and assumptions that may
be considered in determining the range of values of our investments include the nature and realizable value of any collateral, the portfolio
company’s ability to make payments, market yield trend analysis and volatility in future interest rates, call and put features,
the markets in which the portfolio company does business, comparison to publicly traded companies, discounted cash flows and other relevant
factors.
 
We undertake a multi-step valuation process each
quarter when valuing investments for which market quotations are not readily available, as described below:
 

●each
investment is initially valued by the responsible investment professionals of Saratoga Investment Advisors and preliminary valuation
conclusions are documented and discussed with the senior management; and

 

●an
independent valuation firm engaged by our board of directors independently reviews a selection of these preliminary valuations each quarter
so that the valuation of each investment for which market quotes are not readily available is reviewed by the independent valuation firm
at least once each fiscal year. We use a third-party independent valuation firm to value our investment in the subordinated notes of
Saratoga CLO, the Class F-2-R-3 Notes tranche of the Saratoga CLO and the Class E Notes tranche of the SLF 2022 every quarter.

 
In addition, all our investments are subject to the following
valuation process:
 

●the
audit committee of our board of directors reviews and approves each preliminary valuation and our Investment Adviser and independent
valuation firm (if applicable) will supplement the preliminary valuation to reflect any comments provided by the audit committee; and

 

●our
board of directors discusses the valuations and approves the fair value of each investment in good faith based on the input of our Investment
Adviser, independent valuation firm (to the extent applicable) and the audit committee of our board of directors.

 
Our investment in Saratoga CLO is carried at
fair value, which is based on a discounted cash flow model that utilizes prepayment, re-investment and loss assumptions based on historical
experience and projected performance, economic factors, the characteristics of the underlying cash flow, and comparable yields for equity
interests in collateralized loan obligation funds similar to Saratoga CLO, when available, as determined by Saratoga Investment Advisors
and recommended to our board of directors. Specifically, we use Intex cash flow models, or an appropriate substitute, to form the basis
for the valuation of our investment in Saratoga CLO. The models use a set of assumptions including projected default rates, recovery
rates, reinvestment rates and prepayment rates in order to arrive at estimated valuations. The assumptions are based on available market
data and projections provided by third parties as well as management estimates. We use the output from the Intex models (i.e., the estimated
cash flows) to perform a discounted cash flow analysis on expected future cash flows to determine a valuation for our investment in Saratoga
CLO.
 
Because such valuations, and particularly valuations
of private investments and private companies, are inherently uncertain, they may fluctuate over short periods of time and may be based
on estimates. The determination of fair value may differ materially from the values that would have been used if a ready market for these
investments existed. Our NAV could be materially affected if the determinations regarding the fair value of our investments were materially
higher or lower than the values that we ultimately realize upon the disposal of such investments.
 


11
 

 
Rule 2a-5 under the 1940 Act (“Rule 2a-5”)
establishes a regulatory framework for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits boards, subject
to board oversight and certain other conditions, to designate the investment adviser to perform fair value determinations. Rule 2a-5
also defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining
whether a fund must determine the fair value of a security. Rule 31a-4 under the 1940 Act (“Rule 31a-4”) provides the recordkeeping
requirements associated with fair value determinations. While our board of directors has not elected to designate Saratoga Investment
Advisors as the valuation designee, the Company has adopted certain revisions to its valuation policies and procedures in order comply
with the applicable requirements of Rule 2a-5 and Rule 31a-4.
  
Ongoing relationships with and monitoring of portfolio
companies
 
Saratoga Investment Advisors will closely monitor
each investment we make and, when appropriate, will conduct a regular dialogue with both the management team and other debtholders and
seek specifically tailored financial reporting. In addition, in certain circumstances, senior investment professionals of Saratoga Investment
Advisors may take board seats or board observation seats.
 
Distributions
 
Our distributions, if any, will be determined
by our board of directors and paid out of assets legally available for distribution. Any such distributions generally will be taxable
to our stockholders, including to those stockholders who receive additional shares of our common stock pursuant to our dividend reinvestment
plan. Prior to January 2009, we paid quarterly dividends to our stockholders. However, in January 2009, we suspended the practice of
paying quarterly dividends to our stockholders and thereafter paid five annual dividend distributions (December 2013, 2012, 2011, 2010
and 2009) to our stockholders since such time, which distributions were made with a combination of cash and the issuance of shares of
our common stock as discussed more fully below.
 
On September 24, 2014, we announced the recommencement
of quarterly dividends to our stockholders and have subsequently made distributions under this new policy. We have adopted a dividend
reinvestment plan (“DRIP”) that provides for reinvestment of our dividend distributions on behalf of our stockholders unless
a stockholder elects to receive cash. As a result, if our board of directors authorizes, and we declare, a cash dividend, then our stockholders
who have not “opted out” of the DRIP by the dividend record date will have their cash dividends automatically reinvested
into additional shares of our common stock, rather than receiving the cash dividends. We have the option to satisfy the share requirements
of the DRIP through the issuance of new shares of common stock or through open market purchases of common stock by the DRIP plan administrator.
 
In order to maintain our tax treatment as a RIC,
we generally must, among other things, for each fiscal year, timely distribute an amount equal to at least 90% of our ordinary net taxable
income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, reduced by deductible expenses.
In addition, we will be subject to a non-deductible 4% U.S. federal excise tax to the extent we do not distribute during the calendar
year at least (1) 98% of our net ordinary income for the calendar year, (2) 98.2% of our capital gain net income for the one year period
ending on October 31 of the calendar year and (3) any net ordinary income and capital gain net income that we recognized for preceding
years, but were not distributed during such years, and on which we paid no U.S. federal income tax. For the 2023 calendar year, the Company
did not make sufficient distributions such that we did incur the U.S. federal excise tax. We may elect to not distribute a portion of
our ordinary income for the 2024 calendar year and/or portion of the capital gains in excess of capital losses realized during the one-year
period ending October 31, 2024, if any, and, if we do so, we would expect to incur U.S. federal taxes as a result.
  


12
 

 
We may distribute taxable dividends that are
payable in cash or shares of our common stock at the election of each stockholder. Under certain applicable provisions of the Code and
the Treasury regulations and a revenue procedure issued by the Internal Revenue Service (“IRS”), a RIC may treat a distribution
of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution
in either cash or stock of the RIC. The IRS has issued a revenue procedure indicating that this rule will apply if the total amount of
cash to be distributed is not less than 20% of the total distribution. Under the revenue procedure, if too many stockholders elect to
receive their distributions in cash, the cash available for distribution must be allocated among the stockholders electing to receive
cash (with the balance of the distribution paid in stock). In no event will any stockholder, electing to receive cash, receive the lesser
of (a) the portion of the distribution such shareholder has elected to receive in cash or (b) an amount equal to his or her entire distribution
times the percentage limitation on cash available for distribution. If these and certain other requirements are met, for U.S. federal
income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead
of stock. Stockholders receiving such distributions will be required to include the full amount of the dividend as ordinary income (or
as long-term capital gain or qualified dividend income to the extent such distribution is properly reported as such) to the extent of
our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result of receiving distributions in the
form of our common stock, a U.S. stockholder may be required to pay tax with respect to such distributions in excess of any cash received.
If a U.S. stockholder sells the stock he or she receives as a dividend in order to pay this tax, the sales proceeds may be less than
the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore,
with respect to non-U.S. stockholders, we may be required to withhold U.S. federal tax with respect to such dividends, including in respect
of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to
sell shares of our stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our stock. 
 
Competition
 
Our primary competitors in providing financing
to private middle-market companies include public and private investment funds (including private equity funds, mezzanine funds, BDCs
and SBICs), commercial and investment banks and commercial financing companies. Additionally, alternative investment vehicles, such as
hedge funds, frequently invest in middle-market companies. As a result, competition for investment opportunities at middle-market companies
can be intense, and in the past couple of years we believe there has been an increase in the amount of debt capital available on average.
This has resulted in a somewhat more competitive environment for making new investments. Many middle-market companies are still unable
to raise senior debt financing through traditional large financial institutions, and we believe this approach to financing remains difficult
as implementation of U.S. and international financial reforms, such as Basel 3, limits the capacity of large financial institutions to
hold non-investment grade leveraged loans on their balance sheets. We believe that many of these financial institutions have deemphasized
their service and product offerings to middle-market companies in particular.
  
Many of our competitors are substantially larger
and have considerably greater financial and marketing resources than us. For example, some competitors may have access to funding sources
that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which
may allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors
are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC or that the Code imposes on us as a RIC. We use
the industry information available to the investment professionals of Saratoga Investment Advisors to assess investment risks and determine
appropriate pricing for our investments in portfolio companies. In addition, we believe that the investment professionals of our Investment
Adviser enable us to learn about, and compete effectively for, financing opportunities with attractive leveraged companies in the industries
in which we seek to invest.
 
For additional information concerning the competitive
risks we face, please see Part I. Item 1A. “Risk Factors—We operate in a highly competitive market for investment opportunities.”
 
Staffing
 
We do not currently have any employees and do
not expect to have any employees in the future. Services necessary for our business are provided by individuals who are employees of
Saratoga Investment Advisors, pursuant to the terms of the Management Agreement and the Administration Agreement. For a discussion of
the Management Agreement, see “Business—Investment Advisory and Management Agreement” below. We reimburse Saratoga
Investment Advisors for our allocable portion of expenses incurred by it in performing its obligations under the Administration Agreement,
including rent and our allocable portion of the cost of our officers and their respective staffs, subject to certain limitations. For
a discussion of the Administration Agreement, see “Business—Administration Agreement” below.
 


13
 

 
Investment Advisory and Management Agreement
 
Saratoga Investment Advisors serves as our investment
adviser. Our Investment Adviser was formed in 2010 as a Delaware limited liability company and became our investment advisor in July
2010. Subject to the overall supervision of our board of directors, Saratoga Investment Advisors manages our day-to-day operations and
provides investment advisory and management services to us. Under the terms of the Management Agreement, Saratoga Investment Advisors:
 

●determines
the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes;

 

●identifies,
evaluates and negotiates the structure of the investments we make (including performing due diligence on our prospective portfolio companies);

 

●closes
and monitors the investments we make; and

 

●determines
the securities and other assets that we purchase, retain or sell.

 
Saratoga Investment Advisors services under the
Management Agreement are not exclusive, and it is free to furnish similar services to other entities.
 
Management Fee and Incentive Fee 
 
Pursuant to the Management Agreement with Saratoga
Investment Advisors, we pay Saratoga Investment Advisors a fee for investment advisory and management services consisting of two components—a
base management fee and an incentive fee.
 
The base management fee is paid quarterly in arrears, and equals
1.75% per annum of our gross assets (other than cash or cash equivalents but including assets purchased with borrowed funds) and calculated
at the end of each fiscal quarter based on the average value of our gross assets (other than cash or cash equivalents but including assets
purchased with borrowed funds) as of the end of such fiscal quarter and the end of the immediate prior fiscal quarter. As a result, Saratoga
Investment Advisors will benefit as we incur debt or use leverage to purchase assets. Our board of directors will monitor the conflicts
presented by this compensation structure by approving the amount of leverage that we may incur. Base management fees for any partial
month or quarter are appropriately pro-rated.
 
The incentive fee has the following two parts:
 
The first part is calculated and payable quarterly
in arrears based on our pre-incentive fee net investment income for the immediately preceding fiscal quarter. Pre-incentive fee net investment
income means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring,
diligence, managerial and consulting fees or other fees that we receive from portfolio companies) accrued during the fiscal quarter,
minus our operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement,
and any interest expense and dividends paid on any issued and outstanding preferred stock or debt security, but excluding the incentive
fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as market discount,
debt instruments with PIK interest, preferred stock with PIK dividends and zero-coupon securities), accrued income that we have not yet
received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses, unrealized
capital appreciation or depreciation or realized gains or losses resulting from the extinguishment of our own debt. Pre-incentive fee
net investment income, expressed as a rate of return on the value of our net assets (defined as total assets less liabilities) at the
end of the immediately preceding fiscal quarter, is compared to a “hurdle rate” of 1.875% per quarter, subject to a “catch
up” provision. The base management fee is calculated prior to giving effect to the payment of any incentive fees.
 


14
 

 
We pay Saratoga Investment Advisors an incentive
fee with respect to our pre-incentive fee net investment income in each fiscal quarter as follows:
 

●no
incentive fee in any fiscal quarter in which our pre-incentive fee net investment income does not exceed the quarterly hurdle rate of
1.875%;

 

●100.0%
of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any,
that exceeds the hurdle rate but is less than or equal to 2.344% in any fiscal quarter is payable to Saratoga Investment Advisors;

 

●20.0%
of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.344% in any fiscal quarter. We refer to the amount
specified in clause (B) as the “catch-up.” The “catch-up” provision is intended to provide Saratoga Investment
Advisors with an incentive fee of 20.0% on all of our pre-incentive fee net investment income as if a hurdle rate did not apply when
our pre-incentive fee net investment income exceeds 2.344% in any fiscal quarter. Notwithstanding the foregoing, with respect to any
period ending on or prior to December 31, 2010, Saratoga Investment Advisors was only entitled to 20.0% of the amount of our pre-incentive
fee net investment income, if any, that exceeded 1.875% in any fiscal quarter without any catch-up provision. These calculations are
appropriately pro-rated when such calculations are applicable for any period of less than three months.

 
There is no accumulation of amounts from quarter
to quarter on either the hurdle rate or the parameters set by the “catch-up” mechanism or any claw back of amounts previously
paid to Saratoga Investment Advisors if subsequent quarters are below the quarterly hurdle or the “catch-up” parameters.
Furthermore, there is no delay of payment to Saratoga Investment Advisors if prior quarters are below the quarterly hurdle or “catch-up.”
 
The following is a graphical representation of
the calculation of the income-related portion of the incentive fee subsequent to any period ending after December 31, 2010:
 
Quarterly Incentive Fee Based on “Pre-Incentive
Fee Net Investment Income”
 
Pre-Incentive Fee Net Investment Income
(expressed as a percentage of the value of
net assets)
 
 
 
Percentage of Pre-Incentive Fee Net Investment
Income allocated to income-related portion
of incentive fee
  
The second part of the incentive fee, the capital
gains fee, is determined and payable in arrears as of the end of each fiscal year (or, upon termination of the Management Agreement),
and is calculated at the end of each applicable fiscal year by subtracting (1) the sum of our cumulative aggregate realized capital losses
and aggregate unrealized capital depreciation from (2) our cumulative aggregate realized capital gains, in each case calculated from
May 31, 2010 on each investment in the Company’s portfolio. If such amount is positive at the end of such year, then the capital
gains fee for such year is equal to 20.0% of such amount, less the cumulative aggregate amount of capital gains fees paid in all prior
years. If such amount is negative, then there is no capital gains fee for such year.
 


15
 

 
Under the Management Agreement, the capital gains
portion of the incentive fee is based on realized gains and realized and unrealized losses from May 31, 2010. Therefore, realized and
unrealized losses incurred prior to such time will not be taken into account when calculating the capital gains portion of the incentive
fee, and Saratoga Investment Advisors will be entitled to 20.0% of net capital gains that arise after May 31, 2010. In addition, the
cost basis for computing our realized gains and losses on investments held by us as of May 31, 2010 equals the fair value of such investments
as of such date.
 
Examples of Quarterly Incentive Fee Calculation
 
Example 1: Income Related Portion of Incentive Fee(1):
 
Assumptions
 

●Hurdle
rate(2) = 1.875%

 

●Management
fee(3) = 0.4375%

 

●Other
expenses (legal, accounting, custodian, transfer agent, etc.)(4) = 0.33%

 
Alternative 1
 
Additional Assumptions
 

●Investment
income (including interest, dividends, fees, etc.) = 1.25%

 

●Pre-incentive
fee net investment income (investment income–(management fee + other expenses)) = 0.4825% Pre-incentive fee net investment income
does not exceed hurdle rate, therefore there is no incentive fee.

 
Alternative 2
 
Additional Assumptions
 

●Investment
income (including interest, dividends, fees, etc.) = 3.0%

 

●Pre-incentive
fee net investment income (investment income–(management fee + other expenses)) = 2.2325%

 
Pre-incentive fee net investment income exceeds
hurdle rate, but does not fully satisfy the “catch-up” provision, therefore the income related portion of the incentive fee
is 0.3575%.
 


Incentive Fee 
= 
(100.0% × (pre-incentive fee
    net investment income–1.875%)

 
= 
100.0%(2.2325%–1.875%)

 
= 
100.0%(0.3575%)

 
= 
0.3575%

 

(1)The
hypothetical amount of pre-incentive fee net investment income shown is based on a percentage of total net assets.

 

(2)Represents
7.5% hurdle rate.

 

(3)Represents
1.75% annualized management fee. For the purposes of this example, we have assumed that we have not incurred any indebtedness and that
we maintain no cash or cash equivalents.

 

(4)The
“catch-up” provision is intended to provide our Investment Adviser with an incentive fee of 20.0% on all pre-incentive fee
net investment income as if a hurdle rate did not apply when our net investment income exceeds 2.344% in any fiscal quarter.

 


16
 

 

 
Alternative 3
 
Additional Assumptions
 


 
●
Investment income (including interest, dividends, fees, etc.) = 3.5%

 


 
●
Pre-Incentive Fee Net Investment Income (investment income–(management fee + other expenses) = 2.7325%

 
Pre-incentive fee net investment income exceeds
the hurdle rate, and fully satisfies the “catch-up” provision, therefore the income related portion of the incentive fee is
0.5467%.
 


Incentive fee
=
100.0% × pre-incentive fee net investment income (subject to “catch-up”)(4)

Incentive fee
=
100.0% × “catch-up” + (20.0% × (Pre-incentive fee net investment income–2.344%))

Catch up
=
2.344%–1.875%

 
=
0.469%

Incentive fee
=
(100.0% × 0.469%) +(20.0% ×(2.7325%–2.344%))

 
=
0.469% +(20.0% × 0.3885%)

 
=
0.469% + 0.0777%

 
=
0.5467%

 
Example 2: Capital Gains Portion of Incentive Fee:
 
Alternative 1
 
Assumptions(1)
 


 
●
Year 1: $20.0 million investment made in Company A (“Investment A”), and $30.0 million investment made in Company B (“Investment B”)

 


 
●
Year 2: Investment A is sold for $50.0 million and fair market value (“FMV”) of Investment B determined to be $32.0 million

 


 
●
Year 3: FMV of Investment B determined to be $25.0 million

 


 
●
Year 4: Investment B sold for $31.0 million

 
The capital gains portion of the incentive fee, if any,
calculated under the cumulative method would be:
 


 
●
Year 1: None

 


 
●
Year 2: $6 million (20.0% multiplied by $30.0 million realized capital gains on sale of Investment A)

 


 
●
Year 3: None; $5 million (20.0% multiplied by ($30.0 million realized cumulative capital gains less $5.0 million cumulative capital depreciation)) less $6.0 million (capital gains incentive fee paid in Year 2)

 


 
●
Year 4: $200,000; $6.2 million (20.0% multiplied by $31.0 million cumulative realized capital gains) less $6.0 million (capital gains incentive fee paid in Year 2)

 


17
 

 
Alternative 2
 
Assumptions(1)
 


 
●
Year 1: $20.0 million investment made in Company A (“Investment A”), $30.0 million investment made in Company B (“Investment B”) and $25.0 million investment made in Company C (“Investment C”)

 


 
●
Year 2: Investment A sold for $50.0 million, FMV of Investment B determined to be $25.0 million and FMV of Investment C determined to be $25.0 million

 


 
●
Year 3: FMV of Investment B determined to be $27.0 million and Investment C sold for $30.0 million

 


(1)
The examples assume that Investment A and Investment B were acquired by us subsequent to May 31, 2010. If Investment A and B were acquired by us prior to May 31, 2010, then the cost basis for computing our realized gains and losses on such investments would equal the fair value of such investments as of May 31, 2010.

  


 
●
Year 4: FMV of Investment B determined to be $35.0 million

 


 
●
Year 5: Investment B sold for $20.0 million

 
The capital gains portion of the incentive fee,
if any, calculated under the cumulative method would be:
 


 
●
Year 1: None

 


 
●
Year 2: $5.0 million (20.0% multiplied by $25.0 million ($30.0 million realized capital gains on Investment A less $5.0 million unrealized capital depreciation on Investment B))

 


 
●
Year 3: $1.4 million ($6.4 million (20.0% multiplied by $32.0 million ($35.0 million cumulative realized capital gains less $3.0 million unrealized capital depreciation)) less $5.0 million (capital gains incentive fee paid in Year 2))

 


 
●
Year 4: None

 


 
●
Year 5: None ($5.0 million (20.0% multiplied by $25.0 million (cumulative realized capital gains of $35.0 million less realized capital losses of $10.0 million)) less $6.4 million (cumulative capital gains incentive fee paid in Year 2 and Year 3))

 
The Management Agreement with Saratoga Investment
Advisors was initially approved for a two year period by our board of directors at an in-person meeting of the directors, including a
majority of our independent directors, and was approved by our stockholders at the special meeting of stockholders held on July 30, 2010.
Following the initial two year period, our board of directors has approved the renewal of the Management Agreement annually for an additional
one-year term every year, with the last renewal approved at an in-person meeting on July 6, 2023. 
 
In approving renewal of the Management Agreement
for an additional one-year term, the directors considered, among other things, (i) the nature, extent and quality of the advisory and
other services to be provided to us by Saratoga Investment Advisors; (ii) our investment performance and the investment performance of
Saratoga Investment Advisors; (iii) the expected costs of the services to be provided by Saratoga Investment Advisors (including management
fees, advisory fees and expense ratios) as compared to other companies within the industry, and the profits expected to be realized by
Saratoga Investment Advisors; (iv) the limited potential for economies of scale in investment management associated with managing us;
and (v) Saratoga Investment Advisors estimated pro forma profitability with respect to managing us.
 
Payment of our expenses
 
The Management Agreement provides that all investment
professionals of Saratoga Investment Advisors and its staff, when and to the extent engaged in providing investment advisory services
required to be provided by Saratoga Investment Advisors, and the compensation and routine overhead expenses of such personnel allocable
to such services, will be provided and paid for by Saratoga Investment Advisors and not by us.
 
We bear all costs and expenses of our operations and transactions,
including those relating to:
 


 
●
organization;

 


 
●
calculating our NAV (including the cost and expenses of any independent valuation firm);

 


 
●
expenses incurred by our Investment Adviser payable to third parties, including agents, consultants or other advisers, in monitoring financial and legal affairs for us and in monitoring our investments and performing due diligence on our prospective portfolio companies;

 


18
 

 


 
●
expenses incurred by our Investment Adviser payable for travel and due diligence on our prospective portfolio companies;

 


 
●
interest payable on debt, if any, incurred to finance our investments;

 


 
●
offerings of our common stock and other securities;

 


 
●
investment advisory and management fees;

 


 
●
fees payable to third parties, including agents, consultants or other advisers, relating to, or associated with, evaluating and making investments;

 


 
●
transfer agent and custodial fees;

 


 
●
federal and state registration fees;

 


 
●
all costs of registration and listing our common stock on any securities exchange;

 


 
●
U.S. federal, state and local taxes;

 


 
●
independent directors’ fees and expenses;

 


 
●
costs of preparing and filing reports or other documents required by governmental bodies (including the Securities and Exchange Commission (the “SEC”) and the SBA);

 


 
●
costs of any reports, proxy statements or other notices to common stockholders including printing costs;

 


 
●
our fidelity bond, directors and officers errors and omissions liability insurance, and any other insurance premiums;

 


 
●
direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs; and

 


 
●
administration fees and all other expenses incurred by us or, if applicable, the administrator in connection with administering our business (including payments under the Administration Agreement based upon our allocable portion of the administrator’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of our officers and their respective staffs (including travel expenses)).

 
Duration and Termination
 
The Management Agreement will remain in effect
continuously, unless terminated under the termination provisions of the Management Agreement. The Management Agreement provides that it
may be terminated at any time, without the payment of any penalty, upon 60 days written notice, by the vote of stockholders holding a
majority of our outstanding voting securities, or by the vote of our directors or by Saratoga Investment Advisors.
 
The Management Agreement will, unless terminated
as described above, continue in effect from year to year so long as it is approved at least annually by (i) the vote of the board of directors,
or by the vote of stockholders holding a majority of our outstanding voting securities, and (ii) the vote of a majority of our directors
who are not parties to the Management Agreement or “interested persons” (as such term is defined in Section 2(a)(19) of the
1940 Act) of any party to such agreement, in accordance with the requirements of the 1940 Act.
 


19
 

 
Indemnification
 
Under the Management Agreement, Saratoga Investment
Advisors and certain of its affiliates are not liable to us for any action taken or omitted to be taken by Saratoga Investment Advisors
in connection with the performance of any of its duties or obligations under the agreement or otherwise as an investment adviser to us,
except to the extent specified in Section 36(b) of the 1940 Act concerning loss resulting from a breach of fiduciary duty (as the same
is finally determined by judicial proceedings) with respect to the receipt of compensation for services and except to the extent such
action or omission constitutes gross negligence, willful misfeasance, bad faith or reckless disregard of its duties and obligations under
the agreement.
 
We also provide indemnification to Saratoga Investment
Advisors and certain of its affiliates for damages, liabilities, costs and expenses incurred by them in or by reason of any pending, threatened
or completed action, suit, investigation or other proceeding arising out of or otherwise based upon the performance of any of its duties
or obligations under the agreement or otherwise as an investment adviser to us. However, we would not provide indemnification against
any liability to us or our security holders to which Saratoga Investment Advisors or such affiliates would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of any such person’s duties or by reason of the reckless
disregard of its duties and obligations under the agreement.
 
Organization of the Investment Adviser
 
Saratoga Investment Advisors is registered as
an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The principal executive
offices of Saratoga Investment Advisors are located at 535 Madison Avenue, New York, New York 10022.
 
Administration Agreement
 
Pursuant to a separate Administration Agreement,
Saratoga Investment Advisors, who also serves as our administrator, furnishes us with office facilities, equipment and clerical, book-keeping
and record keeping services. Under the Administration Agreement, our administrator also performs, or oversees the performance of, our
required administrative services, which include, among other things, being responsible for the financial records which we are required
to maintain, preparing reports for our stockholders and reports required to be filed with the SEC. In addition, our administrator assists
us in determining and publishing our NAV, oversees the preparation and filing of our tax returns and the printing and dissemination of
reports to our stockholders, and generally oversees the payment of our expenses and the performance of administrative and professional
services rendered to us by others. Payments under the Administration Agreement equal an amount based upon our allocable portion of our
administrator’s overhead in performing its obligations under the Administration Agreement, including rent and our allocable portion
of the cost of our officers and their respective staffs relating to the performance of services under this agreement (including travel
expenses). Our allocable portion is based on the proportion that our total assets bears to the total assets administered or managed by
our administrator. Under the Administration Agreement, our administrator also provides managerial assistance, on our behalf, to those
portfolio companies who accept our offer of assistance. The Administration Agreement may be terminated by either party without penalty
upon 60 days written notice to the other party. Our board of directors, including a majority of independent directors, will annually review
the compensation we pay to the Adviser to determine that the provisions of the Administrative Agreement are carried out satisfactorily
and to determine, among other things, whether the fees payable under such agreement are reasonable in light of the services provided.
Our board of directors reviews the methodology employed in determining how the expenses are allocated to us and any proposed allocation
of administrative expenses among us and any affiliates of the Adviser. Our board of directors then assesses the reasonableness of such
reimbursements for expenses allocated to us based on the breadth, depth and quality of the administrative services as compared to the
estimated cost to us of obtaining similar services from third-party service providers known to be available. In addition, our board of
directors considers whether any single third-party service provider would be capable of providing all such services at comparable cost
and quality. Finally, our board of directors compares the total amount paid to the Adviser for such services as a percentage of our net
assets to the same ratio as reported by other comparable funds. Most recently, on July 6, 2023, our board of directors approved the renewal
of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of
expenses by the Company from $3.275 million to $4.3 million effective August 1, 2023.
 


20
 

 
Indemnification
 
Under the Administration Agreement, Saratoga Investment
Advisors and certain of its affiliates are not liable to us for any action taken or omitted to be taken by Saratoga Investment Advisors
in connection with the performance of any of its duties or obligations under the agreement.
 
We also provide indemnification to Saratoga Investment
Advisors and certain of its affiliates for damages, liabilities, costs and expenses incurred by them in or by reason of any pending, threatened
or completed action, suit, investigation or other proceeding arising out of or otherwise based upon the performance of any of its duties
or obligations under the agreement or otherwise as an administrator to us. However, we do not provide indemnification against any liability
to us or our security holders to which Saratoga Investment Advisors or such affiliates would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of any such person’s duties or by reason of the reckless disregard
of its duties and obligations under the agreement.
 
License Agreement
 
We entered into a trademark license agreement
with Saratoga Investment Advisors, pursuant to which Saratoga Investment Advisors grants us a non-exclusive, royalty-free license to use
the name “Saratoga.” Under this agreement, we have a right to use the “Saratoga” name, for so long as Saratoga
Investment Advisors or one of its affiliates remains our Investment Adviser. Other than with respect to this limited license, we have
no legal right to the “Saratoga” name. Saratoga Investment Advisors has the right to terminate the license agreement if it
is no longer acting as our investment adviser. In the event the Management Agreement is terminated, we would be required to change our
name to eliminate the use of the name “Saratoga.”
 
Business Development Company Regulations 
 
We have elected to be regulated as a BDC under
the 1940 Act. As with other companies regulated by the 1940 Act, a BDC must adhere to certain substantive regulatory requirements. The
1940 Act contains prohibitions and restrictions relating to transactions between BDCs and their affiliates (including any investment advisers
or sub-advisers), principal underwriters and affiliates of those affiliates or underwriters, and requires that a majority of the directors
be independent directors. In addition, the 1940 Act provides that we may not change the nature of our business so as to cease to be, or
to withdraw our election to be regulated as, a BDC, unless approved by “a majority of our outstanding voting securities,”
as defined in the 1940 Act. A majority of the outstanding voting securities of a company is defined under the 1940 Act as the lesser of:
(i) 67.0% or more of such company’s stock present at a meeting if more than 50.0% of the outstanding stock of such company is present
and represented by proxy or (ii) more than 50.0% of the outstanding stock of such company.
 
We do not intend to acquire securities issued
by any investment company (including Section 3(c)(1) and Section 3(c)(7) funds for this purpose, and mutual funds, registered closed-end
funds and BDCs) that exceed the limits imposed by the 1940 Act. Under these limits, except for registered money market funds, we generally
cannot acquire more than 3% of the voting stock of the investment company’s total outstanding voting stock, invest more than 5%
of the value of our total assets in the securities of one investment company or invest more than 10% of the aggregate value of our total
assets in the securities of more than one investment company. With regard to that portion of our portfolio invested in securities issued
by investment companies, it should be noted that such investments might subject our stockholders to additional expenses.
 
We are required to provide and maintain a bond
issued by a reputable fidelity insurance company to protect us against larceny and embezzlement. Furthermore, as a BDC, we are prohibited
from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such person’s office.
 
We and our investment adviser have adopted and
implemented written policies and procedures reasonably designed to prevent violation of the federal securities laws and review these policies
and procedures annually for their adequacy and the effectiveness of their implementation. We and the Investment Adviser have designated
a chief compliance officer to be responsible for administering these policies and procedures. We expect to be periodically examined by
the SEC for compliance with the federal securities laws, including the 1940 Act.
 


21
 

 
Qualifying assets
 
A BDC must have been organized and have its principal
place of business in the United States and must be operated for the purpose of making investments in the types of securities described
in (1), (2) or (3) below. Under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of
the 1940 Act, which are referred to as qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at
least 70.0% of the company’s total assets. The principal categories of qualifying assets relevant to our business are the following:
 


 
(1)
Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC. An eligible portfolio company is defined in the 1940 Act as any issuer which:

 


 
(a)
is organized under the laws of, and has its principal place of business in, the United States;

 


 
(b)
is not an investment company (other than a small business investment company wholly owned by the BDC) or a company that would be an investment company but for certain exclusions under the 1940 Act; and

 


 
(c)
satisfies either of the following:

 


 
(i)
does not have any class of securities listed on a national securities exchange;

 


 
(ii)
has a class of securities listed on a national securities exchange but has an aggregate market value of outstanding voting and non-voting common equity of less than $250.0 million;

 


 
(iii)
is controlled by a BDC or a group of companies including a BDC and the BDC has an affiliated person who is a director of the eligible portfolio company;

 


 
(iv)
is a small and solvent company having total assets of not more than $4.0 million and capital and surplus of not less than $2.0 million; or

 


 
(v)
meets such other criteria as may established by the SEC. (2) Securities of any eligible portfolio company which we control.

 


 
(3)
Securities purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities was unable to meet its obligations as they came due without material assistance other than conventional lending or financing arrangements.

 


 
(4)
Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and we already own at least 60.0% of the outstanding equity of the eligible portfolio company.

 


 
(5)
Securities received in exchange for or distributed on or with respect to securities described in (1) through (4) above, or pursuant to the exercise of options, warrants or rights relating to such securities.

 


 
(6)
Cash, cash equivalents, U.S. Government securities or high-quality debt securities maturing in one year or less from the time of investment.

 
The regulations defining qualifying assets may
change over time. We may adjust our investment focus as needed to comply with and/or take advantage of any regulatory, legislative, administrative
or judicial actions in this area.
 


22
 

 
Significant managerial assistance to portfolio
companies
 
A BDC generally must offer to make available to
the issuer of the securities in which it invests significant managerial assistance, except in circumstances where either (i) the BDC controls
such issuer of securities or (ii) the BDC purchases such securities in conjunction with one or more other persons acting together and
one of the other persons in the group makes available such managerial assistance. As a BDC, we must offer, and must provide upon request,
managerial assistance to our portfolio companies. Making available significant managerial assistance means, among other things, any arrangement
whereby the BDC, through its directors, officers or employees or those of its investment adviser or administrator, offers to provide,
and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies
of a portfolio company. This assistance could involve, among other things, monitoring the operations of our portfolio companies, participating
in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and
financial guidance. Pursuant to a separate Administration Agreement, Saratoga Investment Advisors provides such managerial assistance
on our behalf to portfolio companies that request this assistance, recognizing that our involvement with each investment will vary based
on factors including the size of the company, the nature of our investment, the company’s overall stage of development and our relative
position in the capital structure. We may receive fees for these services.
 
Temporary investments
 
As a BDC, pending investment in other types of
“qualifying assets,” as described above, our investments may consist of cash, cash equivalents, U.S. Government securities
or high-quality debt securities maturing in one year or less from the time of investment, which we refer to, collectively, as temporary
investments, so that 70.0% of our assets are qualifying assets. Typically, we will invest in U.S. Treasury bills or in repurchase agreements,
provided that such agreements are fully collateralized by cash or securities issued by the U.S. Government or its agencies. A repurchase
agreement involves the purchase by an investor, such as us, of a specified security and the simultaneous agreement by the seller to repurchase
it at an agreed-upon future date and at a price which is greater than the purchase price by an amount that reflects an agreed-upon interest
rate. There is no percentage restriction on the proportion of our assets that may be invested in such repurchase agreements. However,
if more than 25.0% of our total assets constitute repurchase agreements from a single counterparty, we would not meet the asset-diversification
requirements in order to qualify as a RIC for U.S. federal income tax purposes. Thus, we do not intend to enter into repurchase agreements
with a single counterparty in excess of this limit. Our Investment Adviser will monitor the creditworthiness of the counterparties with
which we enter into repurchase agreement transactions.
  
Indebtedness and senior securities
 
As a BDC, we are permitted, under specified conditions,
to issue multiple classes of indebtedness and one class of shares of stock, senior to our common stock, if our asset coverage, as defined
in the 1940 Act, is at least equal to 200% immediately after each such issuance or 150% if certain requirements are met. On April 16,
2018, our board of directors, including a majority of our independent directors, approved of us becoming subject to a minimum asset coverage
ratio of 150% under Sections 18(a)(1) and 18(a)(2) of the 1940 Act. The 150% asset coverage ratio became effective on April 16, 2019.
See “Risk Factors – Effective April 16, 2019, our asset coverage requirement was reduced from 200% to 150%, which may increase
the risk of investing in the Company.” We may also borrow amounts up to 5.0% of the value of our total assets for temporary or emergency
purposes without regard to asset coverage.
 
The 1940 Act also limits the amount of warrants,
options and rights to common stock that we may issue and the terms of such securities.
 
Common stock
 
We generally are not able to issue and sell our
common stock at a price below NAV per share. We may, however, sell our common stock, warrants, options or rights to acquire our common
stock, at a price below the current NAV of the common stock if our board of directors determines that such sale is in our best interests
and that of our stockholders, and our stockholders approve such sale. In any such case, the price at which our securities are to be issued
and sold may not be less than a price which, in the determination of our board of directors, closely approximates the market value of
such securities (less any distributing commission or discount). We may also make rights offerings to our stockholders at prices per share
less than the NAV per share, subject to applicable requirements of the 1940 Act.
 


23
 

 
Code of ethics
 
As a BDC, we and Saratoga Investment Advisors
have each adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act, respectively, that
establishes procedures for personal investments and restricts certain personal securities transactions. Personnel subject to each code
may invest in securities for their personal investment accounts, including securities that may be purchased or held by us, so long as
such investments are made in accordance with the code’s requirements. In addition, each code of ethics is available on the EDGAR
database on the SEC’s website at www.sec.gov. Our code of ethics is also available on our corporate governance webpage at
http://ir.saratogainvestmentcorp.com/corporate-governance.
 
Proxy voting policies and procedures
 
SEC registered investment advisers that have the
authority to vote (client) proxies (which authority may be implied from a general grant of investment discretion) are required to adopt
policies and procedures reasonably designed to ensure that the adviser votes proxies in the best interests of its clients. Registered
investment advisers also must maintain certain records on proxy voting. In most cases, we will invest in securities that do not generally
entitle us to voting rights in our portfolio companies. When we do have voting rights, we will delegate the exercise of such rights to
our Investment Adviser.
 
Saratoga Investment Advisors has particular proxy
voting policies and procedures in place. In determining how to vote, officers of Saratoga Investment Advisors will consult with each other,
taking into account our interests and the interests of our investors, as well as any potential conflicts of interest. Saratoga Investment
Advisors will consult with legal counsel to identify potential conflicts of interest. Where a potential conflict of interest exists, Saratoga
Investment Advisors may, if it so elects, resolve it by following the recommendation of a disinterested third party, by seeking the direction
of our independent directors or, in extreme cases, by abstaining from voting. While Saratoga Investment Advisors may retain an outside
service to provide voting recommendations and to assist in analyzing votes, it will not delegate its voting authority to any third party.
 
An officer of Saratoga Investment Advisors will
keep a written record of how all such proxies are voted. It will retain records of (1) proxy voting policies and procedures, (2) all proxy
statements received (or it may rely on proxy statements filed on the SEC’s EDGAR system in lieu thereof), (3) all votes cast, (4)
investor requests for voting information, and (5) any specific documents prepared or received in connection with a decision on a proxy
vote. If it uses an outside service, Saratoga Investment Advisors may rely on such service to maintain copies of proxy statements and
records, so long as such service will provide a copy of such documents promptly upon request.
  
Saratoga Investment Advisors’ proxy voting
policies are not exhaustive and are designed to be responsive to the wide range of issues that may be subject to a proxy vote. In general,
Saratoga Investment Advisors will vote our proxies in accordance with these guidelines unless: (1) it has determined otherwise due to
the specific and unusual facts and circumstances with respect to a particular vote, (2) the subject matter of the vote is not covered
by these guidelines, (3) a material conflict of interest is present, or (4) it finds it necessary to vote contrary to its general guidelines
to maximize stockholder value or our best interests.
 
In reviewing proxy issues, Saratoga Investment
Advisors generally will use the following guidelines:
 
Elections of Directors: In general, Saratoga
Investment Advisors will vote in favor of the management-proposed slate of directors. If there is a proxy fight for seats on a portfolio
company’s board of directors, or Saratoga Investment Advisors determines that there are other compelling reasons for withholding
our vote, it will determine the appropriate vote on the matter. It may withhold votes for directors that fail to act on key issues, such
as failure to: (1) implement proposals to declassify a board, (2) implement a majority vote requirement, (3) submit a rights plan to a
stockholder vote or (4) act on tender offers where a majority of stockholders have tendered their shares. Finally, Saratoga Investment
Advisors may withhold votes for directors of non-U.S. issuers where there is insufficient information about the nominees disclosed in
the proxy statement.
 
Appointment of Auditors: We believe that
a portfolio company remains in the best position to choose its independent auditors and Saratoga Investment Advisors will generally support
management’s recommendation in this regard.
 
Changes in Capital Structure: Changes in
a portfolio company’s organizational documents may be required by state or federal regulation. In general, Saratoga Investment Advisors
will cast our votes in accordance with the management on such proposals. However, Saratoga Investment Advisors will consider carefully
any proposal regarding a change in corporate structure that is not required by state or federal regulation.
 


24
 

 
Corporate Restructurings, Mergers and Acquisitions:
We believe proxy votes dealing with corporate reorganizations are an extension of the investment decision. Accordingly, Saratoga Investment
Advisors will analyze such proposals on a case-by-case basis and vote in accordance with its perception of our interests.
 
Proposals Affecting Stockholder Rights:
We will generally vote in favor of proposals that give stockholders a greater voice in the affairs of a portfolio company and oppose any
measure that seeks to limit such rights. However, when analyzing such proposals, Saratoga Investment Advisors will balance the financial
impact of the proposal against any impairment of stockholder rights as well as of our investment in the portfolio company.
 
Corporate Governance: We recognize the
importance of good corporate governance. Accordingly, Saratoga Investment Advisors will generally favor proposals that promote transparency
and accountability within a portfolio company.
 
Anti-Takeover Measures: Saratoga Investment
Advisors will evaluate, on a case-by-case basis, any proposals regarding anti- takeover measures to determine the likely effect on stockholder
value dilution.
 
Share Splits: Saratoga Investment Advisors
will generally vote with management on share split matters.
 
Limited Liability of Directors: Saratoga
Investment Advisors will generally vote with management on matters that could adversely affect the limited liability of directors.
 
Social and Corporate Responsibility: Saratoga
Investment Advisors will review proposals related to social, political and environmental issues to determine whether they may adversely
affect stockholder value. It may abstain from voting on such proposals where they do not have a readily determinable financial impact
on stockholder value.
 
Privacy principles
 
We are committed to protecting the privacy of
our stockholders. The following explains the privacy policies of Saratoga Investment Corp., Saratoga Investment Advisors and their affiliated
companies.
 
We will safeguard, according to strict standards
of security and confidentiality, all information we receive about our stockholders.
  
Generally, we do not receive any non-public personal
information relating to our stockholders, although certain non-public personal information of our stockholders may become available to
us. The only information we collect from stockholders is the holder’s name, address, number of shares and social security number.
This information is used only so that we can send annual reports and other information about us to the stockholder and send the stockholder
proxy statements or other information required by law. We restrict access to non-public personal information about our stockholders to
our Investment Adviser’s and Administrator’s employees with a legitimate business need for the information. We maintain physical,
electronic and procedural safeguards designed to protect the non-public personal information of our stockholders.
 
We do not share this information with any non-affiliated
third party except as described below:
 


 
●
Authorized Employees of Saratoga Investment Advisors. It is our policy that only authorized employees of Saratoga Investment Advisors who need to know a stockholder’s personal information will have access to it.

 


 
●
Service Providers. We may disclose your personal information to companies that provide services on our behalf, such as recordkeeping, processing a stockholder’s trades, and mailing stockholder information. These companies are required to protect our stockholders’ information and use it solely for the purpose for which they received it.

 


 
●
Courts and Government Officials. If required by law, we may disclose a stockholder’s personal information in accordance with a court order or at the request of government regulators. Only that information required by law, subpoena, or court order will be disclosed.

 


25
 

 
Compliance with applicable laws
 
As a BDC, we are periodically examined by the
SEC for compliance with the federal securities laws, including the 1940 Act.
 
We are required to provide and maintain a bond
issued by a reputable fidelity insurance company to protect us against larceny and embezzlement. Furthermore, as a BDC, we are prohibited
from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such person’s office.
 
We and Saratoga Investment Advisors are each required
to adopt and implement written policies and procedures reasonably designed to prevent violation of the federal securities laws, review
these policies and procedures annually for their adequacy and the effectiveness of their implementation, and designate a chief compliance
officer to be responsible for administering the policies and procedures.
 
The New York Stock Exchange (“NYSE”)
Corporate Governance Regulations
 
The NYSE has adopted corporate governance regulations
that listed companies must comply with. We are in compliance with such corporate governance listing standards applicable to the Company.
 
Affiliated Transactions
 
The Company may be prohibited under the 1940 Act
from participating in certain transactions with certain of its affiliates without the prior approval of our independent directors and,
in some cases, the prior approval of the SEC. On December 12, 2023, the SEC granted an exemptive order (collectively, the “Order”)
that permits the Company to participate in negotiated co-investment transactions with certain other funds and accounts managed and controlled
by Saratoga Investment Advisors or a control affiliate thereof, subject to the satisfaction of certain conditions. Pursuant to the Order,
the Company is permitted to co-invest with such affiliates if a “required majority” (as defined in Section 57(o) of the 1940
Act) of the Board’s independent directors make certain conclusions in connection with a co-investment transaction, including, but not
limited to, that (1) the terms of the potential co-investment transaction, including the consideration to be paid, are reasonable and
fair to the Company and its shareholders and do not involve overreaching in respect of the Company or its shareholders on the part of
any person concerned, and (2) the potential co-investment transaction is consistent with the interests of the Company’s shareholders and
is consistent with its then-current investment objective and strategies. Neither the Company nor its affiliates that are permitted to
rely on the Order are obligated to invest or co-invest when investment opportunities are referred to the Company or them.
 
Small Business Investment Company Regulations
 
Our wholly owned subsidiaries, SBIC LP, SBIC II
LP, and SBIC III LP, received an SBIC license from the SBA on March 28, 2012, August 14, 2019, and September 29, 2022, respectively. Following
the debentures being fully repaid to the SBA, SBIC LP surrendered its license on January 3, 2024, providing the Company access to all
undistributed capital of SBIC LP, and SBIC LP subsequently merged with and into the Company.
 
The SBIC licenses allows our SBIC Subsidiaries
to obtain leverage by issuing SBA-guaranteed debentures, subject to the satisfaction of certain customary procedures. SBA-guaranteed debentures
are non-recourse, interest only debentures with interest payable semi-annually and have a ten-year maturity. The principal amount of SBA-guaranteed
debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteed
debentures is fixed at the time of issuance at a market-driven spread over U.S. Treasury Notes with 10-year maturities.
 
SBICs are designed to stimulate the flow of private
equity capital to eligible small businesses. Under SBA regulations, SBICs may make loans to eligible small businesses and invest in the
equity securities of small businesses. Under present SBA regulations, eligible small businesses include businesses that have a tangible
net worth not exceeding $24.0 million and have average annual fully taxed net income not exceeding $8.0 million for the two most recent
fiscal years. In addition, an SBIC must devote 25.0% of its investment activity to “smaller enterprises” as defined by the
SBA. A smaller enterprise is one that has a tangible net worth not exceeding $6.0 million and has average annual fully taxed net income
not exceeding $2.0 million for the two most recent fiscal years. SBA regulations also provide alternative size standard criteria to determine
eligibility, which depend on the industry in which the business is engaged and are based on such factors as the number of employees and
gross sales. According to SBA regulations, SBICs may make long-term loans to small businesses, invest in the equity securities of such
businesses and provide them with consulting and advisory services.
 


26
 

 
The Company’s wholly owned SBIC Subsidiaries
are able to borrow funds from the SBA against each SBIC’s regulatory capital (which generally approximates equity capital in the
respective SBIC). The SBIC Subsidiaries are subject to customary regulatory requirements including but not limited to, a periodic examination
by the SBA and requirements to maintain certain minimum financial ratios and other covenants. Receipt of an SBIC license does not assure
that the SBIC Subsidiaries will receive SBA-guaranteed debenture funding, which is subject to SBA approval and continued compliance with
SBA regulations and policies. The SBA, as a creditor, will have a superior claim to each SBIC Subsidiaries’ assets over the Company’s
stockholders and debtholders in the event that the Company liquidates such SBIC Subsidiary or the SBA exercises its remedies under the
SBA-guaranteed debentures issued by the SBIC Subsidiary upon an event of default.
 
The Company received exemptive relief from the
SEC to permit it to exclude the senior securities of the SBIC subsidiaries guaranteed by the SBA from the definition of senior securities
in the asset coverage requirement under the 1940 Act. This allows the Company increased flexibility under the asset coverage requirement
by permitting it to borrow up to $350.0 million more than it would otherwise be able to absent the receipt of this exemptive relief.
 
For two or more SBIC’s under common control,
the maximum amount of outstanding SBA debentures cannot exceed $350.0 million with at least $175.0 million in combined regulatory capital.
Our wholly owned SBIC Subsidiaries may borrow funds from the SBA against its respective regulatory capital (which generally approximates
equity capital) that is paid in and is subject to customary regulatory requirements, including, but not limited to, an examination by
the SBA. The SBIC Subsidiaries have $308.4 million of committed capital on an aggregate basis. SBA regulations currently limit the amount
of SBA-guaranteed debentures that an individual SBIC may issue to $175.0 million when it has at least $87.5 million in regulatory capital.
 
As of February 29, 2024, SBIC LP was dissolved.
As of February 29, 2024, we have funded SBIC II LP with an aggregate total of $87.5 million of equity capital and have $175.0 million
of SBA-guaranteed debentures outstanding, and we have funded SBIC III LP with an aggregate total of $66.7 million of equity capital and
have $39.0 million of SBA-guaranteed debentures outstanding.
 
Available Information
 
We file with or submit to the SEC annual, quarterly
and current periodic reports, proxy statements and other information meeting the informational requirements of the Securities Exchange
of 1934, as amended (the “Exchange Act”). The SEC maintains an Internet website that contains reports, proxy and information
statements and other information filed electronically by us with the SEC at www.sec.gov.
 
Our Internet address is www.saratogainvestmentcorp.com.
We make available free of charge on our Internet website our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish
it to, the SEC. Information contained on our website is not incorporated by reference into this Annual Report, and you should not consider
that information to be part of this Annual Report.
 


27
 

 
ITEM 1A. RISK FACTORS  

Investing in our securities involves a number
of significant risks. In addition to other information contained in this Annual Report on Form 10-K, you should consider carefully the
following information before making an investment in our securities. The risks set forth below are the principal risks with respect to
the Company generally and with respect to BDCs, they may not be the only risks we face. This section nonetheless describes the principal
risk factors associated with investment in the Company specifically, as well as those factors generally associated with investment in
a company with investment objectives, investment policies, capital structure or trading markets similar to the Company’s. If any
of the risks occur, our business, financial condition and results of operations could be materially adversely affected. In such case,
our NAV and the trading price of our securities could decline and you may lose all or part of your investment. 

SUMMARY OF RISK FACTORS 

The following is a summary of the principal risks
that you should carefully consider before investing in our securities. These and other risk factors are described more fully in this “Item
1A. Risk Factors.” 

Risks Related to Our Business and Structure  


●We employ leverage, which magnifies the potential for gain or loss on amounts
invested and may increase the risk of investing in us. 


●We are exposed to risks associated with changes in interest rates including
potential effects on our cost of capital and net investment income. 


●The alternative reference rates that have replaced LIBOR in our credit arrangements
and other financial instruments may not yield the same or similar economic results as LIBOR over the life of such transactions. 

Risks Related to the Current Environment  



 
●
Global economic, political and market conditions may adversely affect our business, results of operations and financial condition, including our revenue growth and profitability. 
 



 
●
Inflation may adversely affect the business results of operations and financial condition of our portfolio companies, which may, in turn, impact the valuation of such portfolio companies.
  



 
●
We are currently operating in a period of capital markets disruption and economic uncertainty.
 



 
●
Economic recessions or downturns could impair the ability of our portfolio companies to repay loans and harm our operating results.
 

Risks Related to Our Adviser and Its Affiliates
 



 
●
We may be obligated to pay Saratoga Investment Advisors incentive fees even if we incur a net loss, or there is a decline in the value of our portfolio.
 



 
●
The way in which the base management and incentive fees under the Management Agreement is determined may encourage Saratoga Investment Advisors to take actions that may not be in our best interests.
 



 
●
Saratoga Investment Advisors’ liability is limited under the Management Agreement and we will indemnify Saratoga Investment Advisors against certain liabilities, which may lead it to act in a riskier manner on our behalf than it would when acting for its own account.
 



 
●
Our ability to enter into transactions with our affiliates is restricted.
 

Risks Related to Our Investments 



 
●
A majority of our debt investments are not required to make principal payments until the maturity of such debt securities and are generally riskier than other types of loans.
 



 
●
The lack of liquidity in our investments may adversely affect our business.
 



 
●
Our investment in Saratoga CLO constitutes a leveraged investment in a portfolio of subordinated notes representing the lowest-rated securities issued by a pool of predominantly senior secured first lien term loans and is subject to additional risks and volatility. All losses in the pool of loans will be borne by our subordinated notes and only after the value of our subordinated notes is reduced to zero will the higher-rated notes issued by the pool bear any losses.
 



 
●
Investments in equity securities involve a substantial degree of risk.
 



28
 

 
Risks Related to Our Common Stock  



 
●
We may choose to pay dividends in our own stock, in which case you may be required to pay tax in excess of the cash you receive.
 



 
●
Due to the current market conditions, we may defer our dividends and choose to incur U.S. federal excise tax in order preserve cash and maintain flexibility.
 



 
●
The market price of our common stock may fluctuate significantly.
 



 
●
There is a risk that you may not receive distributions or that our distributions may not grow over time.
 

Risks Related to Our Notes 



 
●
The Notes are unsecured and therefore are effectively subordinated
to any existing and future secured indebtedness, including indebtedness under our Encina Credit Facility and our Live Oak Credit Facility.
 



 
●
An active trading market for the Public Notes may not develop or be sustained, which could limit the market price of the Public Notes or the ability to sell them.
 

RISKS RELATED TO OUR BUSINESS AND STRUCTURE 

We employ leverage, which magnifies the potential for gain or
loss on amounts invested and may increase the risk of investing in us. 

Borrowings, also known as leverage, magnify the
potential for gain or loss on amounts invested and, therefore, increase the risks associated with investing in us. We borrow from and
issue senior debt securities to banks and other lenders that is secured by a lien on our assets. Holders of these senior securities have
fixed dollar claims on our assets that are superior to the claims of the holders of our securities. Leverage is generally considered a
speculative investment technique. Any increase in our income in excess of interest payable on our outstanding indebtedness would cause
our net income to increase more than it would have had we not incurred leverage, while any decrease in our income would cause net income
to decline more sharply than it would have had we not incurred leverage. Such a decline could negatively affect our ability to make common
stock distributions or scheduled debt payments, including with respect to the Notes, as defined below. There can be no assurance that
our leveraging strategy will be successful. 

Our outstanding indebtedness imposes, and additional
debt we may incur in the future will likely impose, financial and operating covenants that restrict our business activities, including
limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to maintain
our status as a RIC. A failure to add new debt facilities or issue additional debt securities or other evidences of indebtedness in lieu
of or in addition to existing indebtedness could have a material adverse effect on our business, financial condition or results of operations. 

As of February 29, 2024, there were $35.0 million
outstanding borrowings under the Encina Credit Facility. As of February 29, 2024, we had issued $214.0 million in SBA-guaranteed debentures
and our $20.0 million principal amount of 8.75% fixed-rate notes due 2025 (the “8.75% 2025 Notes”), $12.0 million principal
amount of 7.00% fixed-rate notes due 2025 (the “7.00% 2025 Notes”), our $5.0 million principal amount of 7.75% fixed-rate
notes due in 2025 (the “7.75% 2025 Notes”), our $175.0 million principal amount of 4.375% fixed-rate notes due in 2026 (the
“4.375% 2026 Notes”), our $75.0 million principal amount of 4.35% fixed-rate notes due in 2027 (the “4.35% 2027 Notes”),
our $105.5 million principal amount of 6.00% fixed-rate notes due in 2027 (the “6.00% 2027 Notes”), our $15.0 million principal
amount of 6.25% fixed-rate notes due in 2027 (the “6.25% 2027 Notes”) our $46.0 million principal amount of 8.00% fixed-rate
notes due 2027 (the “8.00% 2027 Notes”), our $60.375 million principal amount of 8.125% fixed-rate notes due 2027 (the “8.125%
2027 Notes”) and our $57.5 million principal amount of 8.50% fixed-rate notes due 2028 (the “8.50% 2028 Notes” and together
with the 6.00% 2027 Notes, the 8.00% 2027 Notes, and the 8.125% 2027 Notes, the “Public Notes”). Together, the 8.75% 2025
Notes, 7.00% 2025 Notes, the 7.75% 2025 Notes, the 4.35% 2027 Notes, the 6.00% 2027 Notes, the 6.25% 2027 Notes, the 8.00% 2027 Notes,
the 8.125% 2027 Notes, and the 8.50% 2028 Notes are referred to as the “Notes”. We may incur additional indebtedness in the
future, including, but not limited to, borrowings under the Encina Credit Facility, the Live Oak Credit Facility, or the issuance of additional
debt securities in one or more public or private offerings, although there can be no assurance that we will be successful in doing so.
Our ability to service our debt depends largely on our financial performance and is subject to prevailing economic conditions and competitive
pressures. The amount of leverage that we employ at any particular time will depend on our management’s and our board of directors’
assessment of market and other factors at the time of any proposed borrowing. 



29
 

 
As a BDC, we are generally permitted to issue
senior securities only in amounts such that our asset coverage ratio equals at least 150% of total assets to total borrowings and other
senior securities, which include all of our borrowings (other than the senior securities of SBIC II LP’s and SBIC III LP’s
under the terms of our SEC exemptive relief) and any preferred stock we may issue in the future. If this ratio declines below 150%, we
may not be able to incur additional debt and may need to sell a portion of our investments to repay some debt when it is disadvantageous
to do so, and we may not be able to make distributions to our stockholders. 

The following table illustrates the effect of
leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. The calculations in the table
below are hypothetical and actual returns may be higher or lower than those appearing in the table below. 

Assumed Return on Our Portfolio
(net of expenses) 



  
-10.0% 
-5.0% 
0% 
5% 
10%

Assumed Return on Portfolio (Net of Expenses) 
  
  
  
  
 

Corresponding Return to Common Stockholder (1) 
-46% 
-30% 
-14% 
2% 
18%
 


(1)Assumes $1,148.7 billion in average total assets, $792.8 million
in average debt outstanding, $355.3 million in average net assets and an average interest rate of 6.2%. Actual interest payments may
be different. The various return scenarios above exclude borrowing costs, which are then separately deducted from the net return to common
stockholders calculated based on average debt outstanding and average interest rate.
 

Substantially all of the assets of SIF II and SIF III are subject
to security interests under our Encina Credit Facility and our Live Oak Facility, respectively, and all of each SBIC Subsidiary’s
assets are subject to claims of the SBA with respect to SBA-guaranteed debentures we issue and if we default on our obligations thereunder,
we may suffer adverse consequences, including the foreclosure on our assets. 

Substantially all of the assets of SIF II and
SIF III are pledged as collateral under the Encina Credit Facility and the Live Oak Credit Facility, respectively, and all of each SBIC
Subsidiary’s assets are subject to a superior claim by the SBA pursuant to the SBA-guaranteed debentures. If we default on our obligations
under the Encina Credit Facility, the Live Oak Credit Facility, or the SBA-guaranteed debentures, Encina Lender Finance, LLC, Live Oak
Banking Company, and/or the SBA may have the right to foreclose upon and sell, or otherwise transfer, the collateral subject to their
security interests or superior claim. In such event, we may be forced to sell our investments to raise funds to repay our outstanding
borrowings in order to avoid foreclosure and these forced sales may be at times and at prices we would not consider advantageous. Moreover,
such deleveraging of our company could significantly impair our ability to effectively operate our business in the manner in which we
have historically operated. 

In addition, if Encina Lender Finance, LLC,
the lender under the Encina Credit Facility, or the Live Oak Banking Company, the lender under the Live Oak Credit Facility,
exercise their right to sell the assets pledged under the Encina Credit Facility or the Live Oak Credit Facility, respectively, such
sales may be completed at distressed sale prices, thereby diminishing or potentially eliminating the amount of cash available to us
after repayment of the amounts outstanding under the Encina Credit Facility or the Live Oak Credit Facility. 

We are exposed to risks associated with changes in interest rates
including potential effects on our cost of capital and net investment income. 

General interest rate fluctuations and changes
in credit spreads on floating rate loans may have a substantial negative impact on our investments and investment opportunities and, accordingly,
may have a material adverse effect on our rate of return on invested capital. In addition, in response to market indicators showing a
rise in inflation, since March 2022, the Federal Reserve has been rapidly increasing interest rates. Although the Federal Reserve left
its benchmark rates steady in the fourth quarter of 2023, it has indicated that additional rate increases in the future may be necessary
to mitigate inflationary pressures and there can be no assurance that the Federal Reserve will not make upwards adjustments to the federal
funds rate in the future. However, there are reports that the Federal Reserve may begin to cut the benchmark rates in 2024. An increase
in interest rates would make it more expensive to use debt to finance our investments. Decreases in credit spreads on debt that pays a
floating rate of return would have an impact on the income generation of our floating rate assets. Trading prices for debt that pays a
fixed rate of return tend to fall as interest rates rise. Trading prices tend to fluctuate more for fixed rate securities that have longer
maturities. Although we have no policy governing the maturities of our investments, under current market conditions we expect that we
will invest in a portfolio of debt generally having maturities of up to ten years. This means that we will be subject to greater risk
(other things being equal) than an entity investing solely in shorter-term securities. 



30
 

 
Because we may borrow to fund our investments,
a portion of our net investment income may be dependent upon the difference between the interest rate at which we borrow funds and the
interest rate at which we invest these funds. A portion of our investments will have fixed interest rates, while a portion of our borrowings
will likely have floating interest rates. As a result, a significant change in market interest rates could have a material adverse effect
on our net investment income. In periods of rising interest rates, our cost of funds could increase, which would reduce our net investment
income if there is not a corresponding increase in interest income generated by our investment portfolio. Further,
rising interest rates could also adversely affect our performance if we hold investments with floating interest rates, subject to specified
minimum (or “floor”) interest rates, while at the same time engaging in borrowings subject to floating interest rates not
subject to such minimums. In such a scenario, rising interest rates may temporarily increase our interest expense, even though our interest
income from investments is not increasing in a corresponding manner if market rates remain lower than the existing floor rate. If general
interest rates rise, there is also a risk that the portfolio companies in which we hold floating rate securities will be unable to pay
escalating interest amounts, which could result in a default under their loan documents with us. Rising interest rates could also cause
portfolio companies to shift cash from other productive uses to the payment of interest, which may have a material adverse effect on their
business and operations and could, over time, lead to increased defaults. In addition, rising interest rates may increase pressure on
us to provide fixed rate loans to our portfolio companies, which could adversely affect our net investment income, as increases in our
cost of borrowed funds would not be accompanied by increased interest income from such fixed-rate investments. 

We may hedge against such interest rate fluctuations
by using standard hedging instruments such as futures, options and forward contracts, subject to applicable legal requirements, including
without limitation, all necessary registrations (or exemptions from registration) with the Commodity Futures Trading Commission. These
activities may limit our ability to participate in the benefits of lower interest rates with respect to the hedged borrowings. Adverse
developments resulting from changes in interest rates or hedging transactions could have a material adverse effect on our business, financial
condition and results of operations. 

The alternative reference rates that have replaced LIBOR in
our credit arrangements and other financial instruments may not yield the same or similar economic results as LIBOR over the life of
such transactions. 

LIBOR, the London Interbank Offered Rate, is an
index rate that historically was widely used in lending transactions and was a common reference rate for setting the floating interest
rate on private loans. Prior to June 30, 2023, LIBOR was typically the reference rate used in floating-rate loans identified by the Investment
Adviser. 

The ICE Benchmark Administration (“IBA”)
(the entity that is responsible for calculating LIBOR) ceased providing overnight, one, three, six and twelve months USD LIBOR tenors
on June 30, 2023. In addition, the United Kingdom’s Financial Conduct Authority (“FCA”), which oversees the IBA, now
prohibits entities supervised by the FCA from using LIBORs, including USD LIBOR, except in very limited circumstances. 

In the United States, the Secured Overnight Financing
Rate (“SOFR”) is the preferred alternative rate for LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized
by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. SOFR is published by the
Federal Reserve Bank of New York each U.S. Government Securities Business Day, for transactions made on the immediately preceding US.
Government Securities Business Day. Alternative reference rates that may replace LIBOR, including SOFR for USD transactions, may not yield
the same or similar economic results as LIBOR over the lives of such transactions. 

All of our loans that referenced LIBOR have been
amended to reference the forward-looking term rate published by CME Group Benchmark Administration Limited based on the secured overnight
financing rate (“CME Term SOFR”), or a similarly accepted alternative rate. CME Term SOFR rates are forward-looking rates
that are derived by compounding projected overnight SOFR rates over one, three, and six months taking into account the values of multiple
consecutive, executed, one-month and three-month CME Group traded SOFR futures contracts and, in some cases, over-the-counter SOFR Overnight
Indexed Swaps as an indicator of CME Term SOFR reference rate values. CME Term SOFR and the inputs on which it is based are derived from
SOFR. Since CME Term SOFR is a relatively new market rate, there will likely be no established trading market for credit agreements or
other financial instruments when they are issued, and an established market may never develop or may not be liquid. Market terms for instruments
referencing CME Term SOFR rates may be lower than those of later-issued CME Term SOFR indexed instruments. Similarly, if CME Term SOFR
does not prove to be widely used, the trading price of instruments referencing CME Term SOFR may be lower than those of instruments indexed
to indices that are more widely used. 



31
 

 
Uncertainty about U.S. Presidential Administration initiatives
could negatively impact our business, financial condition and results of operations.  

The U.S. government periodically calls for significant
changes to U.S. trade, healthcare, immigration, foreign and government regulatory policy. In this regard, there is significant uncertainty
with respect to legislation, regulation and government policy at the federal level, as well as the state and local levels. Recent events
have created a climate of heightened uncertainty and introduced new and difficult-to-quantify macroeconomic and political risks with potentially
far-reaching implications. There has been a corresponding meaningful increase in the uncertainty surrounding interest rates, inflation,
foreign exchange rates, trade volumes and fiscal and monetary policy. To the extent the U.S. Congress or the current presidential administration
implements changes to U.S. policy, those changes may impact, among other things, the U.S. and global economy, international trade and
relations, unemployment, immigration, corporate taxes, healthcare, the U.S. regulatory environment, inflation and other areas. Although
we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business, financial condition,
operating results and cash flows. Until we know what policy changes are made and how those changes impact our business and the business
of our competitors over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them. 

There are significant potential conflicts of interest which could
adversely impact our investment returns. 

Our executive officers and directors, and the
members of our Investment Adviser, serve or may serve as officers, directors or principals of entities that operate in the same or a related
line of business as we do or of investment funds managed by our affiliates. Accordingly, they may have obligations to investors in those
entities, the fulfillment of which might not be in the best interests of us or our stockholders. For example, Christian L. Oberbeck, our
chief executive officer and managing member of our Investment Adviser, is the managing partner of Saratoga Partners, a middle-market private
equity investment firm. In addition, the principals of our Investment Adviser may manage other funds which may from time to time have
overlapping investment objectives with those of us and accordingly invest in, whether principally or secondarily, asset classes similar
to those targeted by us. If this should occur, the principals of our Investment Adviser will face conflicts of interest in the allocation
of investment opportunities to us and such other funds. Although our investment professionals will endeavor to allocate investment opportunities
in a fair and equitable manner, we and our common stockholders could be adversely affected in the event investment opportunities are allocated
among us and other investment vehicles managed or sponsored by, or affiliated with, our executive officers, directors and Investment Adviser,
and the members of our Investment Adviser. 

Changes in laws or regulations governing our operations, or changes
in the interpretation thereof, and any failure by us to comply with laws or regulations governing our operations may adversely affect
our business. 

We are subject to regulation at the local, state
and federal level. New legislation may be enacted or new interpretations, rulings or regulations could be adopted, including those governing
the types of investments we are permitted to make, any of which could harm us and our stockholders, potentially with retroactive effect.
For example, the current U.S. presidential administration could support an enhanced regulatory agenda that imposes greater costs on all
sectors and on financial services companies in particular. In addition, any change to the SBA’s current debenture program could
have a significant impact on our ability to obtain low-cost leverage and, therefore, our competitive advantage over other funds. 

Legal, tax and regulatory changes could occur
that may adversely affect us. For example, from time to time the market for private equity transactions has been (and is currently being)
adversely affected by a decrease in the availability of senior and subordinated financings for transactions, in part in response to credit
market disruptions and/or regulatory pressures on providers of financing to reduce or eliminate their exposure to the risks involved in
such transactions. 

Additionally, any changes to the laws and regulations
governing our operations related to permitted investments may cause us to alter our investment strategy in order to meet our investment
objectives. Such changes could result in material differences to the strategies and plans set forth in this Annual Report and may shift
our investment focus from the areas of expertise of our Investment Adviser to other types of investments in which our Investment Adviser
may have little or no expertise or experience. Any such changes, if they occur, could have a material adverse effect on our results of
operations and the value of your investment. 



32
 

 
Legislative or other actions relating to taxes could have a negative
effect on the Company. 

Legislative or other actions relating to taxes
could have a negative effect on the Company and its investors. The rules dealing with U.S. federal income taxation are constantly under
review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. We cannot predict with certainty
how any changes in the tax laws might affect the Company, its investments or its investors. New legislation and any U.S. Treasury regulations,
administrative interpretations or court decisions interpreting such legislation could significantly and negatively affect the Company’s
ability to qualify for tax treatment as a RIC or the U.S. federal income tax consequences to the Company and its investors of such qualification
or could have other adverse consequences. You are urged to consult with your tax advisor with respect to the impact of the status of any
legislative, regulatory or administrative developments and proposals and their potential effect on your investment in our securities. 

There is uncertainty surrounding potential legal, regulatory
and policy changes by the current presidential administration and Congress in the United States that may directly affect financial institutions
and the global economy. 

Following the November 2022 elections in the United
States, the Democratic Party controls the Presidency and the Senate, with the Republican Party controlling the House of Representatives.
Despite political tensions and uncertainty in a divided legislature, changes in federal policy, including tax policies, and at regulatory
agencies are expected to occur over time through policy and personnel changes, which may lead to changes involving the level of oversight
and focus on the financial services industry or the tax rates paid by corporate entities. The nature, timing and economic and political
effects of potential changes to the current legal and regulatory framework affecting financial institutions remain highly uncertain. Uncertainty
surrounding future changes may adversely affect our operating environment and therefore our business, financial condition, results of
operations and growth prospects. 

Changes to United States tariff and import/export regulations
may have a negative effect on our portfolio companies and, in turn, harm us. 

There has been ongoing discussion and commentary
regarding potential significant changes to United States trade policies, treaties and tariffs. The current U.S. presidential administration,
along with Congress, has created significant uncertainty about the future relationship between the United States and other countries with
respect to the trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, may have a material
adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade
and, in particular, trade between the impacted nations and the United States. Any of these factors could depress economic activity and
restrict our portfolio companies’ access to suppliers or customers and have a material adverse effect on their business, financial
condition and results of operations, which in turn would negatively impact us. 

We are dependent on information systems and systems failures
could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to
pay dividends. 

Our business is dependent on our and third parties’
communications and information systems. Any failure or interruption of those systems, including as a result of the termination of an agreement
with any third-party service providers, could cause delays or other problems in our activities. Our financial, accounting, data processing,
backup or other operating systems and facilities may fail to operate properly or become disabled or damaged as a result of a number of
factors including events that are wholly or partially beyond our control and adversely affect our business. There could be: 



 
●
sudden electrical or telecommunications outages;
 



 
●
natural disasters such as earthquakes, tornadoes and hurricanes;
 



33
 

 


 
●
disease pandemics or other serious public health events, such as the ongoing COVID-19 pandemic;
 



 
●
events arising from local or larger scale political or social matters, including terrorist acts;
 



 
●
acts of war; and
 



 
●
cyber-attacks.
 

These events, in turn, could have a material adverse
effect on our operating results and negatively affect the market price of our common stock and our ability to pay dividends to our stockholders. 

Our ability to enter into transactions involving derivatives
and financial commitment transactions may be limited.  

In 2020, the SEC adopted Rule 18f-4 under the
1940 Act, which relates to the use of derivatives and other transactions that create future payment or delivery obligations by BDCs (and
other funds that are registered investment companies). Under Rule 18f-4, for which compliance was
required beginning in August 2022, BDCs that use derivatives are subject to a value-at-risk (“VaR”) leverage limit,
certain derivatives risk management program and testing requirements and requirements related to board reporting. These requirements apply
unless the BDC qualifies as a “limited derivatives user,” as defined in Rule 18f-4. A BDC that enters into reverse repurchase
agreements or similar financing transactions could either (i) comply with the asset coverage requirements of Section 18, as
modified by Section 61, of the 1940 Act when engaging in reverse repurchase agreements or (ii) choose to treat such agreements as
derivatives transactions under Rule 18f-4. In addition, under Rule 18f-4, a BDC may enter into an unfunded commitment agreement that is
not a derivatives transaction, such as an agreement to provide financing to a portfolio company, if the BDC has a reasonable belief, at
the time it enters into such an agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect
to all of its unfunded commitment agreements, in each case as it becomes due. If the BDC cannot meet this requirement, it is required
to treat the unfunded commitment as a derivatives transaction subject to the aforementioned requirements of Rule 18f-4. Collectively,
these requirements may limit our ability to use derivatives and/or enter into certain other financial contracts. However, if we fail to
qualify as a limited derivatives user and become subject to the additional requirements under Rule 18f-4, compliance with such requirements
may increase cost of doing business, which could have a material adverse effect on our business, financial condition, results of operations,
and cash flows. 

Internal and external cyber threats, as well as other disasters,
could impair our ability to conduct business effectively.  

We, and others in our industry, are the targets
of malicious cyber activity. A successful cyber-attach, whether perpetrated by criminal or state-sponsored actors, against us or our service
providers, or an accidental disclosure of non-public information, could have an adverse effect on our ability to communicate or conduct
business, negatively impacting our operations and financial condition. This adverse effect can become particularly acute if those events
affect our electronic data processing, transmission, storage, and retrieval systems, or impact the availability, integrity, or confidentiality
of our data, especially personal and other confidential information. 

Saratoga Investment Advisors and third-party service
providers with which we do business depend heavily upon computer systems to perform necessary business functions. Despite our implementation
of a variety of security measures, our computer systems, networks, and data, like those of other companies, could be subject to unauthorized
access, acquisition, use, alteration, or destruction, such as from the insertion of malware (including ransomware) physical and electronic
break-ins or unauthorized tampering, unauthorized access, or system failures and disruptions of our computer systems, networks and date.
If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary, personal and other information processed,
stored in, and transmitted through our computer systems and networks. Such an attack could cause interruptions or malfunctions in our
operations, which could result in financial losses, misappropriation of assets, loss of personal information, litigation, regulatory enforcement
action and penalties, client dissatisfaction or loss, reputational damage, and increased costs associated with mitigation of damages and
remediation. We may have to make a significant investment to fix or replace any inoperable or compromised systems or to modify or enhance
its cybersecurity controls, procedures and measures. Similarly, the public perception that we or our affiliates may have been the target
of a cybersecurity threat, whether successful or not, also could have a material adverse effect on our reputation and lead to financial
losses from loss of business, depending on the nature and severity of the threat. 



34
 

 
If unauthorized parties gain access to such information
and technology systems, they may be able to steal, publish, delete or modify private and sensitive information, including nonpublic personal
information related to stockholders (and their beneficial owners) and material nonpublic information. The systems we have implemented
to manage risks relating to these types of events could prove to be inadequate and, if compromised, could become inoperable for extended
periods of time, cease to function properly or fail to adequately secure private information. Breaches such as those involving covertly
introduced malware, impersonation of authorized users and industrial or other espionage may not be identified even with sophisticated
prevention and detection systems, potentially resulting in further harm and preventing them from being addressed appropriately. The failure
of these systems or of disaster recovery plans for any reason could cause significant interruptions in our and our investment advisor’s
operations and result in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information
relating to stockholders, material nonpublic information and other sensitive information in our possession. 

Third parties with which we do business are sources
of cybersecurity or other technological risks. We outsource certain functions and these relationships allow for the storage and processing
of our information, as well as client, counterparty, employee, and borrower information. Cybersecurity
failures or breaches to Saratoga Investment Advisors and other service providers (including, but not limited to, accountants, custodians,
transfer agents and administrators), and the issuers of securities in which we invest, also have the ability to cause disruptions and
impact business operations, potentially resulting in financial losses, interference with our ability to calculate its NAV, impediments
to trading, the inability of our shareholders to transact business, violations of applicable privacy and other laws, regulatory fines,
penalties, reputation damages, reimbursement of other compensation costs, or additional compliance costs. Our disaster recovery
programs may not be sufficient to mitigate the harm that may result from such a disaster or disruption. In addition, insurance and other
safeguards might only partially reimburse us for our losses, if at all. While we engage in actions to reduce our exposure resulting from
outsourcing, ongoing threats may result in unauthorized access, acquisitions, use, alteration or destruction of data, or other cybersecurity
incidents that affects our data, resulting in increased costs and other consequences as described above. The Company does not control
the cybersecurity measures put in place by such third parties, and such third parties could have limited indemnification obligations to
the Company and its affiliates. If such a third party fails to adopt or adhere to adequate cybersecurity procedures, or if despite such
procedures its networks or systems are breached, information relating to investor transactions and/or personal information of investors
may be lost or improperly accessed, used or disclosed. 

In addition, cybersecurity has become a top priority
for regulators around the world. Privacy and information security laws and regulation changes, and
compliance with those changes, may result in cost increases due to system changes and the development of new administrative processes.
In addition, we may be required to expend significant additional resources to modify our protective measures and to investigate and remediate
vulnerabilities or other exposures arising from operational and security risks. We currently maintain insurance coverage relating to cybersecurity
risks; however, we may be required to expend significant additional resources to modify our protective measures or to investigate and
remediate vulnerabilities or other exposures, and we may be subject to litigation and financial losses that are not fully insured. 

Cybersecurity risks and cyber incidents may adversely affect
our business or the business of our portfolio companies by causing a disruption to our operations or the operations of our portfolio
companies, a compromise or corruption of our confidential information or the confidential information of our portfolio companies and/or
damage to our business relationships or the business relationships of our portfolio companies, all of which could negatively impact the
business, financial condition and operating results of us or our portfolio companies.  

A cybersecurity incident is considered
to be an unauthorized occurrence, or a series of related unauthorized occurrences, on or conducted through a company’s information
systems that jeopardizes the confidentiality, integrity, or availability of a company’s information systems or any information residing
therein.. These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our
information systems or those of our portfolio companies or third-party vendors for purposes of misappropriating assets, stealing confidential
information, corrupting data or causing operational disruption. Despite careful security and controls design, the information technology
system of our portfolio companies and our third-party vendors, may be subject to security breaches and cyber-attacks the result of which
could include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity protection
and insurance costs, litigation and damage to business relationships. As our portfolio companies’ and our third party vendor’s
reliance on technology has increased, so have the risks posed to our information systems, both internal and those provided by third-party
service providers, and the information systems of our portfolio companies and third-party vendors. We have implemented processes,
procedures and internal controls to help mitigate cybersecurity risks and cyber intrusions, but these measures, as well as our
increased awareness of the nature and extent of a risk of a cyber-incident, do not guarantee that a cyber-incident will not occur and/or
that our financial results, operations or confidential information will not be negatively impacted by such an incident. 



35
 

 
Regulations governing our operation as a BDC will affect our
ability to raise additional capital. 

Our business requires a substantial amount of
additional capital. We may acquire additional capital from the issuance of senior securities or other indebtedness or the issuance of
additional shares of our common stock. However, we may not be able to raise additional capital in the future on favorable terms or at
all. We may issue debt securities or preferred securities, which we refer to collectively as “senior securities,” and we may
borrow money from banks or other financial institutions, up to the maximum amount permitted by the 1940 Act. 

We are not generally able to issue and sell our
common stock at a price below NAV per share. We may, however, sell our common stock, or issue warrants, options or rights to acquire our
common stock, at a price below the current NAV of the common stock if our board of directors determines that such sale is in our best
interests and the best interests of our stockholders, and the holders of a majority of our outstanding voting securities have approved
such issuances within the prior year. In any such case, the price at which our securities are to be issued and sold may not be less than
a price which, in the determination of our board of directors, closely approximates the market value of such securities (less any commission
or discount). If our common stock trades at a discount to NAV, this restriction could adversely affect our ability to raise capital. We
do not currently have stockholder approval of issuances below NAV. 

Effective April 16, 2019, our asset coverage requirement was
reduced from 200% to 150%, which may increase the risk of investing in the Company.  

The 1940 Act generally prohibits BDCs from incurring
indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at least 200% (i.e., the amount
of debt may not exceed 50% of the value of our assets). However, on March 23, 2018, the Small Business Credit Availability Act modified
the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from an asset coverage ratio of 200% to an asset
coverage ratio of 150%, if certain requirements are met. Under the 1940 Act, we were allowed to increase our leverage capacity once the
majority of our independent directors approved an increase in our leverage capacity, with such approval becoming effective after one year.
On April 16, 2018, our board of directors, including a majority of our independent directors, approved of our becoming subject to a minimum
asset coverage ratio of 150% under the 1940 Act, which became effective on April 16, 2019. We are required to make certain disclosures
on our website and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage capacity
and usage, and risks related to leverage. 

We are generally permitted to incur indebtedness
or issue senior securities in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 150% after each issuance
of senior securities. Compliance with these requirements may unfavorably limit our investment opportunities and reduce our ability in
comparison to other companies to profit from favorable spreads between the rates at which we can borrow and the rates at which we can
lend. As a BDC, therefore, we may need to issue equity more frequently than our privately-owned competitors, which may lead to greater
stockholder dilution. With respect to stock that is a senior security, we must make provisions to prohibit any dividend distribution to
our stockholders or the repurchase of certain of our securities, unless we meet the applicable asset coverage ratios at the time of the
dividend distribution or repurchase. If the value of our assets declines, we may be unable to satisfy the asset coverage test. If that
happens, we may be required to liquidate a portion of our investments and repay a portion of our indebtedness at a time when such sales
may be disadvantageous in order to make dividend distributions or repurchase certain of our securities. 



36
 

 

 
Leverage magnifies the potential for loss on
investments in our indebtedness and on invested equity capital. As we use leverage to partially finance our investments, our stockholders
will experience increased risks of investing in our securities. If the value of our assets increases, then leveraging would cause the
NAV attributable to our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the value of our
assets decreases, leveraging would cause NAV to decline more sharply than it otherwise would have had we not leveraged our business.
Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net investment income to increase
more than it would without the leverage, while any decrease in our income would cause net investment income to decline more sharply than
it would have had we not borrowed. Such a decline could negatively affect our ability to pay common stock dividends, scheduled debt payments
or other payments related to our securities. Increased leverage may also cause a downgrade of our credit rating. Leverage is generally
considered a speculative investment technique. See “Risk Factors—Risks Related to Our Business and Structure—We employ
leverage, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing in us.” 

The agreements governing our Encina Credit Facility and our
Live Oak Credit Facility contain various covenants that, among other things, limit our discretion in operating our business and provide
for certain minimum financial covenants. 

The agreements governing the Encina Credit Facility
and the Live Oak Credit Facility contain customary default provisions such as the termination or departure of certain “key persons”
of Saratoga Investment Advisors, a material adverse change in our business and the failure to maintain certain minimum loan quality and
performance standards. An event of default under the Encina Credit Facility or the Live Oak Credit Facility would result, among other
things, in termination of the availability of further funds under the Encina Credit Facility or the Live Oak Credit Facility and an accelerated
maturity date for all amounts outstanding under the Encina Credit Facility or the Live Oak Credit Facility, which would likely disrupt
our business and, potentially, the portfolio companies whose loans we financed through the Encina Credit Facility or the Live Oak Credit
Facility. This could reduce our revenues and, by delaying any cash payment allowed to us under the Encina Credit Facility or the Live
Oak Credit Facility until the lender has been paid in full, reduce our liquidity and cash flow and impair our ability to grow our business
and maintain our status as a RIC. 

Each loan origination under the respective facility
is subject to the satisfaction of certain conditions. We cannot assure you that we will be able to borrow funds under the Encina Credit
Facility or Live Oak Credit Facility at any particular time or at all. 

We will be subject to U.S. federal income tax imposed at corporate
rates if we fail to qualify as a RIC. 

We have elected to be treated, and intend to
maintain our qualification annually as a RIC under Subchapter M of the Code; however, no assurance can be given that we will be able
to maintain our RIC tax treatment. As a RIC, we are not subject to U.S. federal income tax on our income (including realized gains) that
is timely distributed to our stockholders, provided that we satisfy certain source-of-income, annual distribution and asset–diversification
requirements. While we are not subject to U.S. federal income tax on the income and gains we timely distribute to our stockholders, our
stockholders will be required to include the amounts of such distributions in income and may be subject to U.S. federal income tax on
such amounts. 

The source-of-income requirement is satisfied
if we derive at least 90% of our annual gross income from interest, dividends, payments with respect to certain securities loans, gains
from the sale or other disposition of securities or options thereon or foreign currencies, or other income derived with respect to our
business of investing in such securities or currencies, and net income from interests in “qualified publicly traded partnerships,”
as defined in the Code. 

The annual distribution requirement generally
is satisfied if we timely distribute to our stockholders on an annual basis an amount equal to at least 90% of our ordinary net taxable
income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, reduced by deductible expenses.
We are subject to certain asset coverage ratio requirements under the 1940 Act and covenants under our borrowing agreements that could,
under certain circumstances, restrict us from making the required distributions. In such case, if we are unable to obtain cash from other
sources or are prohibited from making distributions, we may be subject to U.S. federal income tax at corporate rates. 



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The asset-diversification requirements will be
satisfied if we diversify our holdings so that at the end of each quarter of the taxable year: (i) at least 50% of the value of our assets
consists of cash, cash equivalents, U.S. government securities, securities of other regulated investment companies, and other securities
if such other securities of any one issuer do not represent more than 5% of the value of our assets or more than 10% of the outstanding
voting securities of the issuer; and (ii) no more than 25% of the value of our assets is invested in (a) the securities, other than U.S.
government securities or securities of other regulated investment companies, of one issuer, (b) the securities, other than securities
of other RICs, of two or more issuers that are controlled, as determined under applicable tax rules, by us and that are engaged in the
same or similar or related trades or businesses or (c) the securities of one or more “qualified” publicly traded partnerships. 

Failure to meet these tests may result in our
having to (i) dispose of certain investments or (ii) raise additional capital to prevent the loss of our RIC qualification. Because most
of our investments will be in private companies, any such dispositions could be made at disadvantageous prices and may result in substantial
losses. If we raise additional capital to satisfy the asset- diversification requirements, it could take us time to invest such capital.
During this period, we will invest the additional capital in temporary investments, such as cash and cash equivalents, which we expect
will earn yields substantially lower than the interest income that we anticipate receiving in respect of investments in leveraged loans
and mezzanine debt. 

If we fail to qualify as a RIC for any reason,
all of our taxable income will be subject to U.S. federal income tax at regular corporate rates. The resulting tax liability could substantially
reduce our net assets, the amount of income available for distribution to our common stockholders or payment of our outstanding indebtedness
including the Notes. Such a failure would have a material adverse effect on our results of operations and financial condition. 

Because we intend to distribute between 90% and 100% of our
income to our stockholders in connection with our election to be treated as a RIC, we will continue to need additional capital to finance
our growth. If additional funds are unavailable or not available on favorable terms, our ability to grow will be impaired. 

In order to qualify for the tax benefits available
to RICs and to minimize U.S. federal income taxes at corporate rates, we intend to distribute to our stockholders between 90% and 100%
of our annual taxable income and capital gains, except that we may retain certain net capital gains for investment and treat such amounts
as deemed distributions to our stockholders. If we elect to treat any amounts as deemed distributions, we must pay U.S. federal income
taxes at the corporate rate on such deemed distributions on behalf of our stockholders. As a result of these requirements, we will likely
need to raise capital from other sources to grow our business. As a BDC, we generally are required to meet a coverage ratio of total
assets, less liabilities and indebtedness not represented by senior securities, to total senior securities, which includes all of our
borrowings and any outstanding preferred stock, of at least 150% as of April 16, 2019. These requirements limit the amount that we may
borrow. Because we will continue to need capital to grow our investment portfolio, these limitations may prevent us from incurring debt
and require us to raise additional equity at a time when it may be disadvantageous to do so. 

While we expect to be able to borrow and to issue
additional debt and equity securities, we cannot assure you that debt and equity financing will be available to us on favorable terms,
or at all. Also, as a BDC, we generally are not permitted to issue equity securities priced below NAV without stockholder approval. If
additional funds are not available to us, we could be forced to curtail or cease new investment activities, and our NAV and share price
could decline. 

We may have difficulty paying our required distributions if
we recognize income before or without receiving cash in respect of such income. 

For U.S. federal income tax purposes, we may
be required to recognize taxable income in circumstances in which we do not receive a corresponding payment in cash. For example, we
may on occasion hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments
with PIK or, in certain cases, increasing interest rates or issued with warrants) and we must include in income each year a portion of
the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received
by us in the same taxable year. We may also have to include in income other amounts that we have not yet received in cash, such as deferred
loan origination fees that are paid after origination of the loan or are paid in non-cash compensation such as warrants or stock. In
addition, we may be required to accrue for U.S. federal income tax purposes amounts attributable to our investment in Saratoga CLO, a
collateralized loan obligation fund, that may differ from the distributions paid in respect of our investment in the subordinated notes
of such collateralized loan obligation fund because of the factors set forth above or because distributions on the subordinated notes
are contractually required to be diverted for reinvestment or to pay down outstanding indebtedness. 



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Because original issue discount will be included
in the Company’s “investment company taxable income” for the year of the accrual, we may be requested to make distributions
to shareholders to satisfy the annual distribution requirement applicable to RICs, even where we have not received any corresponding
cash amount. As a result, we may have difficulty meeting the annual distribution requirement necessary to maintain favorable tax treatment.
If we are not able to obtain cash from other sources, and choose not to make a qualifying share distribution, we may become subject to
U.S federal income tax at corporate rates. Additionally, because investments with a deferred payment feature may have the effect of deferring
a portion of the borrower’s payment obligation until maturity of the debt investment, it may be difficult for us to identify and
address developing problems with borrowers in terms of their ability to repay us. 

We operate in a highly competitive market for investment opportunities. 

A number of entities compete with us to make
the types of investments that we make in private middle-market companies. We compete with other BDCs, public and private funds (including
SBICs), commercial and investment banks, commercial financing companies, insurance companies, high-yield investors, hedge funds, and,
to the extent they provide an alternative form of financing, private equity funds. Many of our competitors are substantially larger and
have considerably greater financial, technical and marketing resources than us. Some competitors may have a lower cost of funds and access
to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk
assessments that could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many
of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC. As a result of this competition,
we may not be able to take advantage of attractive investment opportunities from time to time, and we cannot assure you that we will
be able to identify and make investments that meet our investment objective. 

While we do not seek to compete primarily based
on the interest rates we offer, we believe that some our competitors may make loans with interest rates that are comparable or lower
than the rates we offer. 

We may lose investment opportunities if we do
not match our competitors’ pricing, terms and structure. If we match our competitors’ pricing, terms and structure, we may
experience decreased net interest income and increased risk of credit loss. As a result of operating in such a competitive environment,
we may make investments that are on better terms to our portfolio companies than we originally anticipated, which may impact our return
on these investments. 

We are a non-diversified investment company within the meaning
of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in securities of
a single issuer. 

We are classified as a non-diversified investment
company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with respect to the proportion of our
assets that we may invest in securities of a single issuer. Although we seek to maintain a diversified portfolio in accordance with our
business strategies, to the extent that we assume large positions in the securities of a small number of issuers, our NAV may fluctuate
to a greater extent than that of a diversified investment company as a result of changes in the financial condition or the market’s
assessment of the issuer. We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment
company. Beyond our RIC asset-diversification requirements, we do not have fixed guidelines for diversification, and our investments
could be concentrated in relatively few portfolio companies. 

Our financial condition and results of operations depend on
our ability to manage future investments effectively. 

Our ability to achieve our investment objective
depends on our ability to acquire suitable investments and monitor and administer those investments, which depends, in turn, on Saratoga
Investment Advisors’ ability to identify, invest in and monitor companies that meet our investment criteria. 



39
 

 
Accomplishing this result on a cost-effective
basis is largely a function of Saratoga Investment Advisors’ structuring of the investment process and its ability to provide competent,
attentive and efficient service to us. Our executive officers and the officers and employees of Saratoga Investment Advisors have substantial
responsibilities in connection with their roles at Saratoga Partners as well as responsibilities under the Management Agreement. They
may also be called upon to provide managerial assistance to our portfolio companies. These demands on their time, which will increase
as the number of investments grow, may distract them or slow the rate of investment. In order to grow, Saratoga Investment Advisors may
need to hire, train, supervise and manage new employees. However, we cannot assure you that any such employees will contribute beneficially
to the work of Saratoga Investment Advisors. Any failure to manage our future growth effectively could have a material adverse effect
on our business and financial condition. 

We may experience fluctuations in our quarterly and annual results. 

We could experience fluctuations in our quarterly
operating results due to a number of factors, including the interest rate payable on the debt investments we make, the default rate on
such investments, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses,
changes in our portfolio composition, the degree to which we encounter competition in our markets and general economic conditions. As
a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods. In
addition, any of these factors could negatively impact our ability to achieve our investment objectives, which may cause the NAV of our
common stock to decline. 

Terrorist attacks, acts of war, or natural disasters may affect
any market for our common stock, impact the businesses in which we invest and harm our business, operating results and financial condition. 

Portfolio investments may be affected by force
majeure events (i.e., events beyond the control of the party claiming that the event has occurred, including, without
limitation, acts of God, fire, flood, earthquakes, war, terrorism and labor strikes). Some force majeure events may adversely affect
the ability of a party (including a portfolio company or a counterparty to us or a portfolio company) to perform its obligations until
it is able to remedy the force majeure event. In addition, the cost to a portfolio company of repairing or replacing damaged assets resulting
from such force majeure event could be considerable. Additionally, a major governmental intervention into industry, including the nationalization
of an industry or the assertion of control over one or more companies or its assets, could result in a loss to us, including if its investment
in such issuer is cancelled, unwound or acquired (which could be without what we consider to be adequate compensation). To the extent
we are exposed to investments in portfolio companies that as a group are exposed to such force majeure events, the risks and potential
losses to us are enhanced. 

The continued threat of global terrorism and
the impact of military and other action will likely continue to cause volatility in the economies of certain countries, contribute to
increased market volatility and economic uncertainties or deterioration in the United States and worldwide and various aspects thereof,
including in prices of commodities. Our portfolio investments may involve significant strategic assets having a national or regional
profile. The nature of these assets could expose them to a greater risk of being the subject of a terrorist attack than other assets
or businesses. Acts of war could similarly lead to such volatility. For example, in response to the conflict between Russia and Ukraine,
the United States and other countries have imposed sanctions or other restrictive actions against Russia. In addition, the recent outbreak
of hostilities in the Middle East and escalating tensions in the region may create volatility and disruption of global markets. Any of
the above factors, including sanctions, export controls, tariffs, trade wars and other governmental actions, could have a material adverse
effect on our business, financial condition, cash flows, and results of operations, and could cause the market value of our common stock
to decline. 

Substantially all of our portfolio investments are recorded
at fair value as determined in good faith by our board of directors; such valuations are inherently uncertain and may be materially higher
or lower than the values that we ultimately realize upon the disposal of such investments. 

Substantially all of our portfolio is, and we
expect will continue to be, comprised of investments that are not publicly traded. The value of investments that are not publicly traded
may not be readily determinable. We value these investments quarterly at fair value as determined in good faith by our board of directors.
Saratoga Investment Advisors may utilize the services of an independent valuation firm to aid it in determining fair value of investments
for which market quotations are not readily available. The types of factors that may be considered in valuing our investments include
the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings, the markets
in which the portfolio company does business, market yield trend analysis, comparison to publicly traded companies, discounted cash flow
and other relevant factors. Because such valuations, and particularly valuations of private investments and private companies are inherently
uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially
from the values that would have been used if a ready market for these investments existed. Our NAV could be materially affected if the
determinations regarding the fair value of our investments were materially higher or lower than the values that we ultimately realize
upon the disposal of such investments. 



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Our board of directors may change our investment objective,
operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse. 

Our board of directors has the authority to modify
or waive our current investment objective, operating policies and strategies without prior notice and without stockholder approval. We
cannot predict the effect any changes to our current operating policies and strategies would have on our business, financial condition,
and value of our common stock. However, the effects might be adverse, which could negatively impact our ability to pay dividends and
cause you to lose all or part of your investment. 

Any failure to comply with SBA regulations could have an adverse
effect on our operations. 

Our wholly owned subsidiaries, SBIC II LP and
SBIC III LP, received an SBIC license from the SBA on August 14, 2019 and September 29, 2022, respectively. 

The SBA places certain limitations on the financing
terms of investments by SBICs in portfolio companies and prohibits SBICs from providing funds for certain purposes or to businesses in
a few prohibited industries. Compliance with SBIC requirements may cause our SBIC subsidiaries to forego attractive investment opportunities
that are not permitted under SBA regulations. 

Further, SBA regulations require that an SBIC
be periodically examined and audited by the SBA to determine its compliance with the relevant SBA regulations. The SBA prohibits, without
prior SBA approval, a “change of control” of an SBIC or transfers that would result in any person (or a group of persons
acting in concert) owning 10% or more of a class of capital stock of an SBIC. If our SBIC Subsidiaries fail to comply with applicable
SBA regulations, the SBA could, depending on the severity of the violation, limit or prohibit its use of debentures, declare outstanding
debentures immediately due and payable, and/or limit it from making new investments. In addition, the SBA can revoke or suspend a license
for willful or repeated violation of, or willful or repeated failure to observe, any provision of the Small Business Investment Act of
1958 or any rule or regulation promulgated thereunder. These actions by the SBA would, in turn, negatively affect us because our SBIC
Subsidiaries are our wholly owned subsidiaries. Any failure to comply with SBA regulations may hinder our ability to take advantage of
our SBIC subsidiaries’ access to SBA-guaranteed debentures, which could have an adverse effect on our operations. 

RISKS RELATED TO THE CURRENT ENVIRONMENT  

Global economic, political and market conditions may adversely
affect our business, results of operations and financial condition, including our revenue growth and profitability.  

The current worldwide financial market situation,
as well as various social and political tensions in the United States and around the world (including wars and other forms of conflict,
terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health
epidemics), may contribute to increased market volatility, may have long-term effects on the U.S. and worldwide financial markets, and
may cause economic uncertainties or deterioration in the United States and worldwide. 

On January 31, 2020, the United Kingdom ended
its membership in the European Union, referred to as “Brexit.” Following the termination of a transition period, the United
Kingdom and the European Union entered into a trade and cooperation agreement to govern the future relationship between the parties,
which was provisionally applied as of January 1, 2021 and entered into force on May 1, 2021 following ratification by the European Union.
With respect to financial services, the agreement leaves decisions on equivalence and adequacy to be determined by each of the United
Kingdom and the European Union unilaterally in due course. Such agreement is untested and could lead to ongoing political and economic
uncertainty and periods of exacerbated volatility in both the United Kingdom and in wider European and global markets for some time.
In addition, on December 24, 2020, the European Union and United Kingdom governments signed a trade deal that became provisionally effective
on January 1, 2021 and that now governs the relationship between the United Kingdom and the European Union (the “Trade Agreement”).
The Trade Agreement implements significant regulation around trade, transport of goods and travel restrictions between the United Kingdom
and the European Union. 



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Notwithstanding the foregoing, the longer term
economic, legal, political and social implications of Brexit are unclear at this stage and are likely to continue to lead to ongoing
political and economic uncertainty and periods of increased volatility in both the United Kingdom and in wider European markets for some
time. In particular, Brexit could lead to calls for similar referendums in other European Union jurisdictions, which could cause increased
economic volatility in the European and global markets. This mid- to long-term uncertainty could have adverse effects on the economy
generally and on our ability to earn attractive returns. In particular, currency volatility could mean that our returns are adversely
affected by market movements and could make it more difficult, or more expensive, for us to execute prudent currency hedging policies. 

We are currently operating in a period of significant market
disruption and economic uncertainty, which may have a negative impact on our business, financial condition and results of operations.
An extended disruption in the capital markets and the credit markets could negatively affect our business. 

From time to time, capital markets may experience
periods of disruption and instability. The U.S. capital markets have experienced extreme volatility and disruption following the global
outbreak of COVID-19 that began in December 2019, the conflict between Russia and Ukraine that began in late February 2022, and the ongoing
war in the Middle East (see “Terrorist attacks, acts of war, or natural disasters may affect any market for our common stock, impact
the businesses in which we invest and harm our business, operating results and financial condition” for more information). Even
after the COVID-19 pandemic subsided, the U.S. economy, as well as most other major economies, have continued to experience unpredictable
economic conditions, and we anticipate our businesses would be materially and adversely affected by any prolonged economic downturn or
recession in the United States and other major markets. In addition, disruptions in the capital markets have increased the spread between
the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. These types of
events have adversely affected and could continue to adversely affect operating results for us and for our portfolio companies. 

The current economic conditions have resulted
in an adverse impact on the ability of lenders to originate loans, the volume and type of loans originated, the ability of borrowers
to make payments and the volume and type of amendments and waivers granted to borrowers and remedial actions taken in the event of a
borrower default, each of which could negatively impact the amount and quality of loans available for investment by the Company and returns
to the Company, among other things. The U.S. credit markets (in particular for middle-market loans) have experienced the following among
other things: (i) increased draws by borrowers on revolving lines of credit and other financing instruments; (ii) increased
requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or
increased difficulty in obtaining refinancing at the maturity dates of their loans and increased uses of PIK features; and (iii) greater
volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues. 

With respect to loans to portfolio companies,
the Company will be impacted if, among other things, (i) amendments and waivers are granted (or are required to be granted) to borrowers
permitting deferral of loan payments or allowing for PIK interest payments, (ii) borrowers default on their loans, are unable to refinance
their loans at maturity, or go out of business, or (iii) the value of loans held by the Company decreases as a result of such events
and the uncertainty they cause. Portfolio companies may also be more likely to seek to draw on unfunded commitments we have made, and
the risk of being unable to fund such commitments is heightened during such periods. Depending on the duration and extent of the disruption
to the business operations of our portfolio companies, we expect some portfolio companies, particularly those in vulnerable industries,
to experience financial distress and possibly to default on their financial obligations to us and/or their other capital providers. In
addition, if such portfolio companies are subjected to prolonged and severe financial distress, we expect some of them to substantially
curtail their operations, defer capital expenditures, and lay off workers. These developments would be likely to permanently impair their
businesses and result in a reduction in the value of our investments in them. 



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These conditions and future market disruptions
and/or illiquidity could have an adverse effect on our (and our portfolio companies’) business, financial condition, results of
operations and cash flows. Ongoing unfavorable economic conditions may increase our funding costs, limit our access to the capital markets
or result in a decision by lenders not to extend credit to our portfolio companies and/or us. These events have limited and could continue
to limit our investment originations, limit our ability to grow and have a material negative impact on our operating results and the
fair values of our debt and equity investments. We may have to access, if available, alternative markets for debt and equity capital,
and a severe disruption in the global financial markets, deterioration in credit and financing conditions, continued increases in interest
rates, or uncertainty regarding U.S. government spending and deficit levels or other global economic conditions could have a material
adverse effect on our business, financial condition and results of operations. 

While we intend to continue to source and invest
in new loan transactions to U.S. middle-market companies, we cannot be certain that we will be able to do so successfully or consistently.
A lack of suitable investment opportunities may impair our ability to make new investments, and may negatively impact our earnings and
result in decreased dividends to our shareholders. 

If current economic conditions continue for an
extended period of time, loan delinquencies, loan non-accruals, problem assets, and bankruptcies may increase. In addition, collateral
for our loans may decline in value, which could cause loan losses to increase and the net worth and liquidity of loan guarantors could
decline, impairing their ability to honor commitments to us. An increase in loan delinquencies and non-accruals or a decrease in loan
collateral and guarantor net worth could result in increased costs and reduced income which would have a material adverse effect on our
business, financial condition or results of operations. We continue to observe supply chain interruptions, labor difficulties, commodity
inflation and elements of economic and financial market instability both globally and in the United States. 

We will need to raise additional capital in the
future in order to continue to make investments in accordance with our business and investing strategy and to pursue new business opportunities.
Ongoing disruptive conditions in the financial industry and the impact of new legislation in response to those conditions could restrict
our business operations and could adversely impact our results of operations and financial condition. 

We cannot be certain as to the duration or magnitude
of the ongoing economic conditions in the markets in which we and our portfolio companies operate and corresponding declines in economic
activity that may negatively impact the U.S. economy and the markets for the various types of goods and services provided by U.S. middle-market
companies. Depending on the duration, magnitude and severity of these conditions and their related economic and market impacts, certain
of our portfolio companies may suffer declines in earnings and could experience financial distress, which could cause them to default
on their financial obligations to us and their other lenders. 

We will also be negatively affected if our operations
and effectiveness or the operations and effectiveness of a portfolio company (or any of the key personnel or service providers of the
foregoing) is compromised or if necessary or beneficial systems and processes are disrupted. In consideration of these and related factors,
we may downgrade our internal ratings with respect to other portfolio companies in the future as conditions warrant and new information
becomes available. 

Inflation may adversely affect the business, results of operations
and financial condition of our portfolio companies, which may, in turn, impact the valuation of such portfolio companies. 

Certain of our portfolio companies may be impacted
by inflation, which may, in turn, impact the valuation of such portfolio companies. If such portfolio companies are unable to pass any
increases in their costs along to their customers, it could adversely affect their results and their ability to pay interest and principal
on our loans, particularly if interest rates rise in response to inflation. In addition, any projected future decreases in our portfolio
companies’ operating results due to inflation could adversely impact the fair value of those investments. Any decreases in the
fair value of our investments could result in future unrealized losses and therefore reduce our net assets resulting from operations. 



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Further downgrades of the U.S. credit rating, automatic spending
cuts, or another government shutdown could negatively impact our liquidity, financial condition and earnings. 

U.S. debt ceiling and budget deficit concerns
have increased the possibility of additional credit-rating downgrades and economic slowdowns, or a recession in the United States. U.S.
lawmakers have passed legislation to raise the federal debt ceiling on multiple occasions, including, most recently, in June 2023, which
suspended the debt ceiling through early 2025 unless Congress takes legislative action to further extend or defer it. Despite taking
action to suspend the debt ceiling, ratings agencies have threatened to lower the long-term sovereign credit rating on the United States,
including Fitch downgrading the U.S. government’s long-term rating from AAA to AA+ in August 2023 and Moody’s lowering the
U.S. government’s credit rating outlook from “stable” to “negative” in November 2023. 

The impact of the increased debt ceiling and/or
downgrades to the U.S. government’s sovereign credit rating or its perceived creditworthiness could adversely affect the U.S. and
global financial markets and economic conditions. Absent further quantitative easing by the Federal Reserve, these developments could
cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms.
In addition, disagreement over the federal budget has caused the U.S. federal government to shut down for periods of time, and may lead
to additional shutdowns in the future. Continued adverse political and economic conditions could have a material adverse effect on our
business, financial condition and results of operations. 

Economic recessions or downturns could impair the ability of
our portfolio companies to repay loans and harm our operating results. 

Many of our portfolio companies are susceptible
to economic slowdowns or recessions, including as a result of, among other things, the COVID-19 pandemic, elevated levels of inflation,
and a rising interest rate environment, and may be unable to repay our loans during these periods. Therefore, any non-performing assets
are likely to increase, and the value of our portfolio is likely to decrease during these periods. Adverse economic conditions also may
decrease the value of any collateral securing some of our loans and the value of our equity investments and could lead to financial losses
in our portfolio and a corresponding decrease in revenues, net income and assets. Unfavorable economic conditions also could increase
our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events
could prevent us from increasing our investments and harm our operating results. 

A portfolio company’s failure to satisfy
financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, acceleration of its loans and
foreclosure on its assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio company’s ability
to meet its obligations under the debt securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default
or to negotiate new terms with a defaulting portfolio company. It is possible that we could become subject to a lender liability claim,
including as a result of actions taken if we or Saratoga Investment Advisors renders significant managerial assistance to the borrower.
Furthermore, if one of our portfolio companies were to file for bankruptcy protection, even though we may have structured our investment
as senior secured debt, depending on the facts and circumstances, including the extent to which we or Saratoga Investment Advisors provided
managerial assistance to that portfolio company or otherwise exercise control over it, a bankruptcy court might re-characterize our debt
as a form of equity and subordinate all or a portion of our claim to claims of other creditors. 

RISKS RELATED TO OUR ADVISER AND ITS AFFILIATES  

We may be obligated to pay Saratoga Investment Advisors incentive
fees even if we incur a net loss, or there is a decline in the value of our portfolio. 

Saratoga Investment Advisors is entitled to incentive
fees for each fiscal quarter in an amount equal to a percentage of the excess of our investment income for that quarter (before deducting
incentive compensation, but net of operating expenses and certain other items) above a threshold return for that quarter. Our pre-incentive
fee net investment income, for incentive compensation purposes, excludes realized and unrealized capital gains or losses that we may
incur in the fiscal quarter, even if such capital gains or losses result in a net gain or loss on our consolidated statements of operations
for that quarter. Thus, we may be required to pay Saratoga Investment Advisors incentive fees for a fiscal quarter even if there is a
decline in the value of our portfolio or we incur a net loss for that quarter. 



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Under the terms of the Management Agreement, we may have to
pay incentive fees to Saratoga Investment Advisors in connection with the sale of an investment that is sold at a price higher than the
fair value of such investment on May 31, 2010, even if we incur a loss on the sale of such investment. 

Incentive fees on capital gains paid to Saratoga
Investment Advisors under the Management Agreement equals 20.0% of our “incentive fee capital gains,” which equals our realized
capital gains on a cumulative basis from May 31, 2010 through the end of the fiscal year, if any, computed net of all realized capital
losses and unrealized capital depreciation on a cumulative basis on each investment in the Company’s portfolio, less the aggregate
amount of any previously paid capital gain incentive fee. Under the Management Agreement, the capital gains portion of the incentive
fee is based on realized gains and realized and unrealized losses from May 31, 2010. Therefore, realized and unrealized losses incurred
prior to such time will not be taken into account when calculating the capital gains portion of the incentive fee, and Saratoga Investment
Advisors will be entitled to 20.0% of the incentive fee capital gains that arise after May 31, 2010. In addition, the cost basis for
computing realized gains and losses on investments held by us as of May 31, 2010 will equal the fair value of such investments as of
such date. See our Form 10-Q for the quarter ended May 31, 2010 that was filed with the SEC on July 15, 2010 for the fair value and other
information related to our investments as of such date. As a result, we may be required to pay incentive fees to Saratoga Investment
Advisors on the sale of an investment even if we incur a realized loss on such investment, so long as the investment is sold for an amount
greater than its fair value as of May 31, 2010. 

The way in which the base management and incentive fees under
the Management Agreement is determined may encourage Saratoga Investment Advisors to take actions that may not be in our best interests. 

The incentive fee payable by us to our Investment
Adviser may create an incentive for it to make investments on our behalf that are risky or more speculative than would be the case in
the absence of such compensation arrangement, which could result in higher investment losses, particularly during cyclical economic downturns.
The way in which the incentive fee payable to our Investment Adviser is determined, which is calculated separately in two components
as a percentage of the income (subject to a hurdle rate) and as a percentage of the realized gain on invested capital, may encourage
our Investment Adviser to use leverage to increase the return on our investments or otherwise manipulate our income so as to recognize
income in quarters where the hurdle rate is exceeded. 

Moreover, we pay Saratoga Investment Advisors
a base management fee based on our total assets, including any investments made with borrowings, which may create an incentive for it
to cause us to incur more leverage than is prudent, or not to repay our outstanding indebtedness when it may be advantageous for us to
do so, in order to maximize its compensation. Under certain circumstances, the use of leverage may increase the likelihood of default,
which would disfavor the holders of our securities. 

The incentive fee payable by us to our Investment
Adviser also may create an incentive for our Investment Adviser to invest on our behalf in instruments that have a deferred interest
feature. Under these investments, we would accrue the interest over the life of the investment but would not receive the cash income
from the investment until the end of the investment’s term, if at all. Our net investment income used to calculate the income portion
of our incentive fee, however, includes accrued interest. Thus, a portion of the incentive fee would be based on income that we have
not yet received in cash and may never receive in cash if the portfolio company is unable to satisfy such interest payment obligation
to us. Consequently, while we may make incentive fee payments on income accruals that we may not collect in the future and with respect
to which we do not have a “claw back” right against our Investment Adviser per se, the amount of accrued income written off
in any period will reduce the income in the period in which such write-off was taken and may thereby reduce such period’s incentive
fee payment. 

In addition, Saratoga Investment Advisors receives
a quarterly income incentive fee based, in part, on our pre-incentive fee net investment income, if any, for the immediately preceding
calendar quarter. This income incentive fee is subject to a fixed quarterly hurdle rate before providing an income incentive fee return
to Saratoga Investment Advisors. This fixed hurdle rate was determined when then current interest rates were relatively low on a historical
basis. Thus, if interest rates rise, it would become easier for our investment income to exceed the hurdle rate and, as a result, more
likely that Saratoga Investment Advisors will receive an income incentive fee than if interest rates on our investments remained constant
or decreased. However, if we repurchase our outstanding debt securities, including the Notes, and such repurchase results in our recording
a net gain or loss on the extinguishment of debt for financial reporting and tax purposes, such net gain or loss will not be included
in our pre-incentive fee net investment income for purposes of determining the income incentive fee payable to our Investment Adviser
under the Management Agreement. Moreover, our Investment Adviser receives the incentive fee based, in part, upon net capital gains realized
on our investments. Unlike the portion of the incentive fee based on income, there is no performance threshold applicable to the portion
of the incentive fee based on net capital gains. As a result, our Investment Adviser may have a tendency to invest more in investments
that are likely to result in capital gains as compared to income producing securities. Such a practice could result in our investing
in more speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during
economic downturns. 



45
 

 
Our board of directors will seek to ensure that
Saratoga Investment Advisors is acting in our best interests and that any conflict of interest faced by Saratoga Investment Advisors
in its capacity as our Investment Adviser does not negatively impact us. 

The base management fee we pay to Saratoga Investment Advisors
may induce it to influence our leverage, which may be contrary to our interest. 

We pay Saratoga Investment Advisors a quarterly
base management fee based on the value of our total assets (including any assets acquired with leverage). Accordingly, Saratoga Investment
Advisors has an economic incentive to increase our leverage. Our board of directors monitors the conflicts presented by this compensation
structure by approving the amount of leverage that we incur. If our leverage is increased, we will be exposed to increased risk of loss,
bear the increase cost of issuing and servicing such senior indebtedness, and will be subject to any additional covenant restrictions
imposed on us in an indenture or other instrument or by the applicable lender. 

Saratoga Investment Advisors’ liability is limited under
the Management Agreement and we will indemnify Saratoga Investment Advisors against certain liabilities, which may lead it to act in
a riskier manner on our behalf than it would when acting for its own account. 

Saratoga Investment Advisors has not assumed
any responsibility to us other than to render the services described in the Management Agreement. Pursuant to the Management Agreement,
Saratoga Investment Advisors and its officers and employees are not liable to us for their acts under the Management Agreement absent
willful misfeasance, bad faith, gross negligence or reckless disregard in the performance of their duties. We have agreed to indemnify,
defend and protect Saratoga Investment Advisors and its officers and employees with respect to all damages, liabilities, costs and expenses
resulting from acts of Saratoga Investment Advisors not arising out of willful misfeasance, bad faith, gross negligence or reckless disregard
in the performance of their duties under the Management Agreement. These protections may lead Saratoga Investment Advisors to act in
a riskier manner when acting on our behalf than it would when acting for its own account. 

Our ability to enter into transactions with our affiliates is
restricted. 

Because we have elected to be treated as a BDC,
we are prohibited under the 1940 Act from participating in certain transactions with certain of our affiliates without the prior approval
of our independent directors and, in some cases, the SEC. Any person that owns, directly or indirectly, 5.0% or more of our outstanding
voting securities is our affiliate for purposes of the 1940 Act and we are generally prohibited from buying or selling any securities
(other than any security of which we are the issuer) from or to such affiliate, absent the prior approval of our independent directors.
The 1940 Act also prohibits certain “joint” transactions with certain of our affiliates, which could include investments
in the same portfolio company, without prior approval of our independent directors and, in some cases, the SEC. If a person acquires
more than 25.0% of our voting securities, we are prohibited from buying or selling any security (other than any security of which we
are the issuer) from or to such person or certain of that person’s affiliates, or entering into prohibited joint transactions with
such person, absent the prior approval of the SEC. Similar restrictions limit our ability to transact business with our officers, directors
or Investment Adviser or their affiliates. We rely on the Order granted to us, Saratoga Investment Advisors and certain of its affiliates
by the SEC that permits us to participate in negotiated co-investment transactions with certain other funds and accounts managed and
controlled by Saratoga Investment Advisors or a control affiliate thereof, subject to the satisfaction of certain conditions. These restrictions
may limit the scope of investment opportunities that would otherwise be available to us and there can be no assurance that we will be
able to participate in all investment opportunities that are suitable to us. 



46
 

 
RISKS RELATED TO OUR INVESTMENTS 

If we make unsecured debt investments, we may lack adequate
protection in the event our portfolio companies become distressed or insolvent and will likely experience a lower recovery than more
senior debtholders in the event our portfolio companies default on their indebtedness. 

We make unsecured debt investments in portfolio
companies. Unsecured debt investments are unsecured and junior to other indebtedness of the portfolio company. As a consequence, the
holder of an unsecured debt investment may lack adequate protection in the event the portfolio company becomes distressed or insolvent
and will likely experience a lower recovery than more senior debtholders in the event the portfolio company defaults on its indebtedness.
In addition, unsecured debt investments of middle-market companies are often highly illiquid and in adverse market conditions may experience
steep declines in valuation even if they are fully performing. 

If we invest in the securities and other obligations of distressed
or bankrupt companies, such investments may be subject to significant risks, including lack of income, extraordinary expenses, uncertainty
with respect to satisfaction of debt, lower-than expected investment values or income potentials and resale restrictions. 

We are authorized to invest in the securities
and other obligations of distressed or bankrupt companies. At times, distressed debt obligations may not produce income and may require
us to bear certain extraordinary expenses (including legal, accounting, valuation and transaction expenses) in order to protect and recover
our investment. Therefore, to the extent we invest in distressed debt, our ability to achieve current income may be diminished which
may affect our ability to make distributions on our common stock or make interest and principal payments of the Notes. 

We also will be subject to significant uncertainty
as to when and in what manner and for what value the distressed debt we invest in will eventually be satisfied (e.g., through a liquidation
of the obligor’s assets, an exchange offer or plan of reorganization involving the distressed debt securities or a payment of some
amount in satisfaction of the obligation). In addition, even if an exchange offer is made or plan of reorganization is adopted with respect
to distressed debt held by us, there can be no assurance that the securities or other assets received by us in connection with such exchange
offer or plan of reorganization will not have a lower value or income potential than may have been anticipated when the investment was
made. 

Moreover, any securities received by us upon
completion of an exchange offer or plan of reorganization may be restricted as to resale. As a result of our participation in negotiations
with respect to any exchange offer or plan of reorganization with respect to an issuer of distressed debt, we may be restricted from
disposing of such securities if we are in possession of material non-public information relating to the issuer. 

Second priority liens on collateral securing loans that we make
to our portfolio companies may be subject to control by senior creditors with first priority liens. If there is a default, the value
of the collateral may not be sufficient to repay in full both the first priority creditors and us. 

Certain loans that we make to portfolio companies
will be secured on a second priority basis by the same collateral securing senior secured debt of such companies. The first priority
liens on the collateral will secure the portfolio company’s obligations under any outstanding senior debt and may secure certain
other future debt that may be permitted to be incurred by the company under the agreements governing the loans. The holders of obligations
secured by the first priority liens on the collateral will generally control the liquidation of and be entitled to receive proceeds from
any realization of the collateral to repay their obligations in full before us. In addition, the value of the collateral in the event
of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance
that the proceeds, if any, from the sale or sales of all of the collateral would be sufficient to satisfy the loan obligations secured
by the second priority liens after payment in full of all obligations secured by the first priority liens on the collateral. If such
proceeds are not sufficient to repay amounts outstanding under the loan obligations secured by the second priority liens, then we, to
the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the company’s
remaining assets, if any. 

The rights we may have with respect to the collateral
securing the loans we make to our portfolio companies with senior debt outstanding may also be limited pursuant to the terms of one or
more intercreditor agreements that we enter into with the holders of senior debt. Under such an intercreditor agreement, at any time
that obligations that have the benefit of the first priority liens are outstanding, any of the following actions that may be taken with
respect to the collateral will be at the direction of the holders of the obligations secured by the first priority liens: the ability
to cause the commencement of enforcement proceedings against the collateral; the ability to control the conduct of such proceedings;
the approval of amendments to collateral documents; releases of liens on the collateral; and waivers of past defaults under collateral
documents. We may not have the ability to control or direct such actions, even if our rights are adversely affected. 



47
 

 
A majority of our debt investments are not required to make
principal payments until the maturity of such debt securities and are generally riskier than other types of loans. 

As of February 29, 2024, 77.8% of our debt portfolio
consisted of “interest-only” loans, which are structured such that the borrower makes only interest payments throughout the
life of the loan and makes a large, “balloon payment” at the end of the loan term. The ability of a borrower to make or refinance
a balloon payment may be affected by a number of factors, including the financial condition of the borrower, prevailing economic conditions,
interest rates, and collateral values. If the interest-only loan borrower is unable to make or refinance a balloon payment, we may experience
greater losses than if the loan were structured as amortizing. 

We may be exposed to higher risks with respect to our investments
that include PIK interest, particularly our investments in interest-only loans. 

To the extent our portfolio investments permit
PIK interest and our portfolio companies elect to pay PIK interest, we will be exposed to higher risks, including the following: 



 
●
because PIK interest results in an increase in the
    size of the loan balance of the underlying loan, our exposure to potential loss increases when we receive PIK interest;
 



 
●
PIK instruments may have higher yields, which reflect
    the payment deferral and credit risk associated with these instruments;
 



 
●
PIK accruals may create uncertainty about the source
    of our distributions to stockholders;
 



 
●
PIK instruments may have unreliable valuations because
    their continuing accruals require continuing judgments about the collectability of the deferred payments and the value of the collateral.
 

To the extent our investments are structured
as interest-only loans, PIK interest will increase the size of the balloon payment due at the end of the loan term. PIK interest payments
on such loans may increase the probability and magnitude of a loss on our investment, particularly with respect to our interest-only
loans. As of February 29, 2024, 19.7% of our interest-only loans provided for contractual PIK interest, which represents contractual
interest added to a loan balance and due at the end of such loan’s term, and 49.6% of such investments elected to pay a portion
of interest due in PIK. As of February 29, 2024, 2.3% of the Company’s interest-only loans are loans that pay contractual PIK interest
only. 

The lack of liquidity in our investments may adversely affect
our business. 

We primarily make investments in private companies.
A portion of these securities may be subject to legal and other restrictions on resale, transfer, pledge or other disposition or will
otherwise be less liquid than publicly traded securities. The illiquidity of our investments may make it difficult for us to sell such
investments if the need arises. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may realize
significantly less than the value at which we have previously recorded our investments. In addition, we may face other restrictions on
our ability to liquidate an investment in a business entity to the extent that we or our Investment Adviser has or could be deemed to
have material non-public information regarding such business entity. 

We may not have the funds to make additional investments in
our portfolio companies which could impair the value of our portfolio. 

After our initial investment in a portfolio company,
we may be called upon from time to time to provide additional funds to such company or have the opportunity to increase our investment
through the exercise of a warrant to purchase common stock. There is no assurance that we will make, or will have sufficient funds to
make, follow-on investments. Any decisions not to make a follow-on investment or any inability on our part to make
such an investment may have a negative impact on a portfolio company in need of such an investment, may result in a missed opportunity
for us to increase our participation in a successful operation or may reduce the expected yield on the investment. Even if we have sufficient
capital to make a desired follow-on investment, we may elect not to make a follow-on investment because we may not
want to increase our level of risk, because we prefer other opportunities or because we are inhibited by compliance with BDC requirements,
SBA regulations or the desire to maintain our RIC tax treatment. Our ability to make follow-on investments may also be limited
by our Investment Adviser allocation policy. 



48
 

 
The debt securities in which we invest are subject to credit
risk and prepayment risk. 

An issuer of a debt security may be unable to
make interest payments and repay principal. We could lose money if the issuer of a debt obligation is, or is perceived to be, unable
or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. Substantially all of the debt
investments held in our portfolio hold a non-investment grade rating by one or more rating agencies or, if not rated, would be rated
below investment grade if they were rated, which are often referred to as “junk.” 

Certain debt instruments may contain call or
redemption provisions which would allow the issuer thereof to prepay principal prior to the debt instrument’s stated maturity.
This is known as prepayment risk. Prepayment risk is greater during a falling interest rate environment as issuers can reduce their cost
of capital by refinancing higher interest debt instruments with lower interest debt instruments. An issuer may also elect to refinance
their debt instruments with lower interest debt instruments if the credit standing of the issuer improves. To the extent debt securities
in our portfolio are called or redeemed, we may receive less than we paid for such security and we may be forced to reinvest in lower
yielding securities or debt securities of issuers of lower credit quality. 

Our investment in Saratoga CLO constitutes a leveraged investment
in a portfolio of subordinated notes representing the lowest-rated securities issued by a pool of predominantly senior secured first
lien term loans and is subject to additional risks and volatility. All losses in the pool of loans will be borne by our subordinated
notes and only after the value of our subordinated notes is reduced to zero will the higher-rated notes issued by the pool bear any losses. 

At February 29, 2024, our investment in the subordinated
notes of Saratoga CLO, a collateralized loan obligation fund, had a fair value of $9.5 million and constituted 0.8% of our portfolio.
This investment constitutes a first loss position in a portfolio that, as of February 29, 2024,
was composed of $640.8 million in aggregate principal amount of primarily senior secured first lien term loans and $12.1 million in uninvested
cash. In addition, as of February 29, 2024, we also own $9.4 million in aggregate principal of the F-2-R-3 Notes with a fair value
of $8.9 million in the Saratoga CLO, that only rank senior to the subordinated notes. A first loss position means that we will suffer
the first economic losses if the value of Saratoga CLO decreases. First loss positions typically carry a higher risk and earn a higher
yield. Interest payments generated from this portfolio will be used to pay the administrative expenses of Saratoga CLO and interest on
the debt issued by Saratoga CLO before paying a return on the subordinated notes. 

Principal payments will be similarly applied
to pay administrative expenses of Saratoga CLO and for reinvestment or repayment of Saratoga CLO debt before paying a return on, or repayment
of, the subordinated notes. In addition, 80.0% of our fixed management fee and 100.0% our incentive management fee for acting as the
collateral manager of Saratoga CLO is subordinated to the payment of interest and principal on Saratoga CLO debt. Any losses on the portfolio
will accordingly reduce the cash flow available to pay these management fees and provide a return on, or repayment of, our investment.
Depending on the amount and timing of such losses, we may experience smaller than expected returns and, potentially, the loss of our
entire investment. 

As the manager of the portfolio of Saratoga CLO,
we will have some ability to direct the composition of the portfolio, but our discretion is limited by the terms of the debt issued by
Saratoga CLO which may limit our ability to make investments that we feel are in the best interests of the subordinated notes, and the
availability of suitable investments. The performance of Saratoga CLO’s portfolio is also subject to many of the same risks sets
forth in this Annual Report with respect to portfolio investments in leveraged loans. 

In the event that a bankruptcy court orders the substantive consolidation
of us with Saratoga CLO, the creditors of Saratoga CLO, including the holders of $640.8
million aggregate principal amount of debt, as of February 29, 2024 issued by Saratoga CLO, would have claims
against the consolidated bankruptcy estate, which would include our assets. 

We believe that we have observed and will observe
certain formalities and operating procedures that are generally recognized requirements for maintaining our separate existence and that
our assets and liabilities can be readily identified as distinct from those of Saratoga CLO. However, we cannot assure you that a bankruptcy
court would agree in the event that we or Saratoga CLO became a debtor in connection with a bankruptcy proceeding. If a bankruptcy court
concludes that substantive consolidation of us with Saratoga CLO is warranted, the creditors of Saratoga CLO would have claims against
the consolidated bankruptcy estate. 



49
 

 
Substantive consolidation means that our assets
are placed in a single bankruptcy estate with those of Saratoga CLO, rather than kept separate, and that the creditors of Saratoga CLO
have a claim against that single estate (including our assets), as opposed to retaining their claims against only Saratoga CLO. 

Our investments in Saratoga CLO have a different risk profile
than would direct investments made by us, including less information available and fewer rights regarding repayment compared to companies
we invest in directly as well as complicated accounting and tax implications. 

Due to our investments in the Saratoga CLO being
primarily broadly syndicated loans, there may be less information available to us on those companies as compared to most investments
that we make directly. For example, we will typically have fewer rights relating to how such companies manage their cash flow to repay
debt, the inclusion of protective covenants, default penalties, lien protection, change of control provisions and board observation rights
in deal terms, and our general ability to oversee the company’s operations. Our investment in Saratoga CLO is also subject to the
risk of leverage associated with the debt issued by Saratoga CLO and the repayment priority of senior debt holders in Saratoga CLO. 

The accounting and tax implications of such investments
are complicated. In particular, reported earnings from the equity tranche investment of Saratoga CLO are recorded according to U.S. GAAP
based upon an effective yield calculation. Current taxable earnings on these investments, however, will generally not be determinable
until after the end of the fiscal year of Saratoga CLO that ends within the Company’s fiscal year, even though the investment is
generating cash flow. In general, the U.S. federal income tax treatment of investment in Saratoga CLO may result in higher distributable
earnings in the early years and a capital loss at maturity, while for reporting purposes the totality of cash flows are reflected in
a constant yield to maturity. 

The senior loan portfolio of Saratoga CLO may be concentrated
in a limited number of industries or borrowers, which may subject Saratoga CLO, and in turn us, to a risk of significant loss if there
is a downturn in a particular industry in which Saratoga CLO is concentrated. 

Saratoga CLO has senior loan portfolios that
may be concentrated in a limited number of industries or borrowers. A downturn in any particular industry or borrower in which Saratoga
CLO is heavily invested may subject Saratoga CLO, and in turn us, to a risk of significant loss and could significantly impact the aggregate
returns we realize. If an industry in which Saratoga CLO is heavily invested suffers from adverse business or economic conditions, a
material portion of our investment in Saratoga CLO could be affected adversely, which, in turn, could adversely affect our financial
position and results of operations. For example, as of February 29, 2024, Saratoga CLO’s investments in the banking, finance, insurance
& real estate industry represented approximately 19.0% of the fair value of Saratoga CLO’s portfolio. Companies in the banking,
finance, insurance & real estate industry are subject to general economic downturns and business cycles and will often suffer reduced
revenues and rate pressures during periods of economic uncertainty. In addition, investments in business service represented approximately
10.8% of the fair value of Saratoga CLO’s portfolio. Changes in healthcare or other laws and regulations applicable to the businesses
of some of the companies in which Saratoga CLO invests may occur that could increase their compliance and other costs of doing business,
require significant systems enhancements, or render their products or services less profitable or obsolete, any of which could have a
material adverse effect on their results of operations. There has also been an increased political and regulatory focus on healthcare
laws in recent years, and new legislation could have a material effect on the business and operations of companies in which Saratoga
CLO invests. 

Failure by Saratoga CLO to satisfy certain debt compliance ratios
may entitle senior debtholders to additional payments, which may harm our operating results by reducing payments we would otherwise be
entitled to receive from Saratoga CLO. 

The failure by Saratoga CLO to satisfy certain
debt compliance ratios, specifically those with respect to adequate collateralization and/or interest coverage tests, could lead to a
reduction in its payments to us. In the event that Saratoga CLO failed these certain tests, senior debt holders may be entitled to additional
payments that would, in turn, reduce the payments we would otherwise be entitled to receive. Separately, we may incur expenses to the
extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of certain financial covenants,
with Saratoga CLO or any other investment we may make. If any of these occur, it could materially and adversely affect our operating
results and cash flows. 



50
 

 
Downgrades by rating agencies of broadly syndicated loans could
adversely impact the financial performance of Saratoga CLO and its ability to pay equity distributions in the future. 

Ratings agencies have undergone reviews of CLO
tranches and their broadly syndicated loans in light of the COVID-19 pandemic’s adverse impact on the economic market. Such reviews
have, in some cases, resulted in downgrades of broadly syndicated loans. Such downgrades of broadly syndicated loans, as well as downgrades
of broadly syndicated loans in the future, could adversely impact the financial performance of Saratoga CLO, thereby limiting Saratoga
CLO’s ability to pay equity distributions and subordinated management fees to the Company in the future. The full extent of downgrades
by ratings agencies of broadly syndicated loans is currently unknown, thereby resulting in a high degree of uncertainty with respect
to Saratoga CLO’s financial performance and ability to pay equity distributions and subordinated management fees to the Company
in the future. 

We may invest through joint ventures, partnerships or other
special purpose vehicles and our investments through these vehicles may entail greater risks, or risks that we otherwise would not incur,
if we otherwise made such investments directly. 

We may make indirect investments in portfolio
companies through joint ventures, partnerships or other special purpose vehicles, including SLF JV. In general, the risks associated
with indirect investments in portfolio companies through a joint venture, partnership or other special purpose vehicle are similar to
those associated with a direct investment in a portfolio company. While we intend to analyze the credit and business of a potential portfolio
company in determining whether to make an investment in an investment vehicle, we will nonetheless be exposed to the creditworthiness
of the investment vehicle. In the event of a bankruptcy proceeding against the portfolio company, the assets of the portfolio company
may be used to satisfy its obligations prior to the satisfaction of our investment in the investment vehicle (i.e., our investment in
the investment vehicle could be structurally subordinated to the other obligations of the portfolio company). In addition, if we are
to invest in an investment vehicle, we may be required to rely on our partners in the investment vehicle when making decisions regarding
such investment vehicle’s investments, accordingly, the value of the investment could be adversely affected if our interests diverge
from those of our partners in the investment vehicle. 

Available information about privately held companies is limited. 

We invest primarily in privately-held companies.
Generally, little public information exists about these companies, and we are required to rely on the ability of our Investment Adviser’s
investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. These companies
and their financial information are not subject to the Sarbanes-Oxley Act of 2002 and other rules that govern public companies. If we
are unable to uncover all material information about these companies, we may not make a fully informed investment decision, and we may
lose money on our investments. 

When we are a debt or minority equity investor in a portfolio
company, we may not be in a position to control the entity, and its management may make decisions that could decrease the value of our
investment. 

We make both debt and minority equity investments;
therefore, we are subject to the risk that a portfolio company may make business decisions with which we disagree, and the stockholders
and management of such company may take risks or otherwise act in ways that do not serve our interests. As a result, a portfolio company
may make decisions that could decrease the value of our portfolio holdings. 



51
 

 
Our portfolio companies may incur debt or issue equity securities
that rank equally with, or senior to, our investments in such companies. 

Our portfolio companies usually will have, or
may be permitted to incur, other debt, or issue other equity securities that rank equally with, or senior to, our investments. By their
terms, such instruments may provide that the holders are entitled to receive payment of dividends, interest or principal on or before
the dates on which we are entitled to receive payments in respect of our investments. These debt instruments will usually prohibit the
portfolio companies from paying interest on or repaying our investments in the event and during the continuance of a default under such
debt. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of securities
ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any
distribution in respect of our investment. After repaying such holders, the portfolio company may not have any remaining assets to use
for repaying its obligation to us. In the case of debtor ranking equally with our investments, we would have to share on an equal basis
any distributions with other holders in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant
portfolio company. 

There may be circumstances where our debt investments could
be subordinated to claims of other creditors or we could be subject to lender liability claims. 

If one of our portfolio companies were to go
bankrupt, even though we may have structured our interest as senior debt, depending on the facts and circumstances, including the extent
to which we actually provided managerial assistance to that portfolio company, a bankruptcy court might re-characterize our debt holding
and subordinate all or a portion of our claim to that of other creditors. In addition, lenders can be subject to lender liability claims
for actions taken by them where they become too involved in the borrower’s business or exercise control over the borrower. It is
possible that we could become subject to a lender’s liability claim, including as a result of actions taken if we actually render
significant managerial assistance. 

Investments in equity securities involve a substantial degree
of risk. 

We purchase common stock and other equity securities.
Although equity securities have historically generated higher average total returns than fixed-income securities over the long-term,
equity securities also have experienced significantly more volatility in those returns and in recent years have significantly underperformed
relative to fixed-income securities. The equity securities we acquire may fail to appreciate and may decline in value or become worthless
and our ability to recover our investment will depend on our portfolio company’s success. Investments in equity securities involve
a number of significant risks, including: 



 
●
any equity investment we make in a portfolio company
    could be subject to further dilution as a result of the issuance of additional equity interests and to serious risks as a junior
    security that will be subordinate to all indebtedness or senior securities in the event that the issuer is unable to meet its obligations
    or becomes subject to a bankruptcy process;
 



 
●
to the extent that the portfolio company requires additional
    capital and is unable to obtain it, we may not recover our investment in equity securities; and
 



 
●
in some cases, equity securities in which we invest
    will not pay current dividends, and our ability to realize a return on our investment, as well as to recover our investment, will
    be dependent on the success of our portfolio companies. Even if the portfolio companies are successful, our ability to realize the
    value of our investment may be dependent on the occurrence of a liquidity event, such as a public offering or the sale of the portfolio
    company. It is likely to take a significant amount of time before a liquidity event occurs or we can sell our equity investments.
    In addition, the equity securities we receive or invest in may be subject to restrictions on resale during periods in which it could
    be advantageous to sell.
 

There are special risks associated with investing in preferred
securities, including: 



 
●
preferred securities may include provisions that permit
    the issuer, at its discretion, to defer distributions for a stated period without any adverse consequences to the issuer. If we own
    a preferred security that is deferring its distributions, we may be required to report income for U.S. federal income tax purposes
    even though we have not received any cash payments in respect of such income;
 



 
●
preferred securities are subordinated with respect
    to corporate income and liquidation payments, and are therefore subject to greater risk than debt;
 



52
 

 


 
●
preferred securities may be substantially less liquid
    than many other securities, such as common securities or U.S. government securities; and
 



 
●
preferred security holders generally have no voting
    rights with respect to the issuing company, subject to limited exceptions.
 

Our investments in foreign debt, including that of emerging
market issuers, may involve significant risks in addition to the risks inherent in U.S. investments. 

Although there are limitations on our ability
to invest in foreign debt, we may, from time to time, invest in debt of foreign companies, including the debt of emerging market issuers.
Investing in foreign companies may expose us to additional risks not typically associated with investing in U.S. companies. These risks
include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid
markets and less available information than is generally the case in the United States, higher transaction costs, less government supervision
of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting
and auditing standards and greater price volatility. 

Investments in the debt of emerging market issuers
may subject us to additional risks such as inflation, wage and price controls, and the imposition of trade barriers. Furthermore, economic
conditions in emerging market countries are, to some extent, influenced by economic and securities market conditions in other emerging
market countries. Although economic conditions are different in each country, investors’ reaction to developments in one country
can have effects on the debt of issuers in other countries. 

Although most of our investments will be U.S.
dollar-denominated, our investments that are denominated in a foreign currency will be subject to the risk that the value of a particular
currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances,
the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities
for investment and capital appreciation, and political developments. 

We may employ hedging techniques to minimize
these risks, but we cannot assure you that we will fully hedge against these risks or that such strategies will be effective. As a result,
a change in currency exchange rates may adversely affect our profitability. 

We may expose ourselves to risks if we engage in hedging transactions. 

We may utilize instruments such as forward contracts,
currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our
portfolio positions from changes in currency exchange rates and market interest rates. Use of these hedging instruments may expose us
to counter-party credit risk. Hedging against a decline in the values of our portfolio positions does not eliminate the possibility of
fluctuations in the values of such positions or prevent losses if the values of such positions decline. However, such hedging can establish
other positions designed to gain from those same developments, thereby offsetting the decline in the value of such portfolio positions.
Such hedging transactions may also limit the opportunity for gain if the values of the portfolio positions should increase. Moreover,
it may not be possible to hedge against an exchange rate or interest rate fluctuation that is generally anticipated at an acceptable
price. 

The success of our hedging transactions will
depend on our ability to correctly predict movements in currencies and interest rates. 

Therefore, while we may enter into such transactions
to seek to reduce currency exchange rate and interest rate risks, unanticipated changes in currency exchange rates or interest rates
may result in poorer overall investment performance than if we had not engaged in any such hedging transactions. In addition, the degree
of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being
hedged may vary. Moreover, for a variety of reasons, we may not seek to establish a perfect correlation between such hedging instruments
and the portfolio holdings being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us
to risk of loss. In addition, it may not be possible to hedge fully or perfectly against currency fluctuations affecting the value of
securities denominated in non-U.S. currencies because the value of those securities is likely to fluctuate as a result of factors not
entirely related to currency fluctuations. To the extent we engage in hedging transactions, we also face the risk that counterparties
to the derivative instruments we hold may default, which may expose us to unexpected losses from positions where we believed that our
risk had been appropriately hedged. 



53
 

 
Our investments may be risky, and you could lose all or part
of your investment. 

Substantially all of our debt investments hold
a non-investment grade rating by one or more rating agencies (which non-investment grade debt is commonly referred to as “high
yield” and “junk” debt) or, where not rated by any rating agency, would be below investment grade or “junk”,
if rated. A below investment grade or “junk” rating means that, in the rating agency’s view, there is an increased
risk that the obligor on such debt will be unable to pay interest and repay principal on its debt in full. We also invest in debt that
defers or pays PIK interest. To the extent interest payments associated with such debt are deferred, such debt will be subject to greater
fluctuations in value based on changes in interest rates, such debt could produce taxable income without a corresponding cash payment
to us, and since we generally do not receive any cash prior to maturity of the debt, the investment will be of greater risk. 

In addition, private middle-market companies
in which we invest are exposed to a number of significant risks, including: 



 
●
limited financial resources and an inability to meet
    their obligations, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of
    us realizing any guarantees we may have obtained in connection with our investment;
 



 
●
shorter operating histories, narrower product lines
    and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions and market
    conditions, as well as general economic downturns;
 



 
●
dependence on the management talents and efforts of
    a small group of persons; the death, disability, resignation or termination of one or more of which could have a material adverse
    impact on the company and, in turn, on us;
 



 
●
less predictable operating results and, possibly, substantial
    additional capital requirements to support their operations, finance expansion or maintain their competitive position; and
 



 
●
difficulty accessing the capital markets to meet future
    capital needs.
 

In addition, our executive officers, directors
and our Investment Adviser may, in the ordinary course of business, be named as defendants in litigation arising from our investments
in the portfolio companies. 

Our portfolio may continue to be concentrated in a limited number
of industries, which may subject us to a risk of significant loss if there is a downturn in a particular industry in which a number of
our investments are concentrated. 

Our portfolio may continue to be concentrated
in a limited number of industries. A downturn in any particular industry in which we are invested could significantly impact the aggregate
returns we realize. 

As of February 29, 2024, our investments in the
Healthcare Software industry represented approximately 10.6% of the fair value of our portfolio and our investments in the IT Services
industry represented approximately 6.9% of the fair value of our portfolio. In addition, we may from time to time invest a relatively
significant percentage of our portfolio in industries we do not necessarily target. If an industry in which we have significant investments
suffers from adverse business or economic conditions, as these industries have to varying degrees, a material portion of our investment
portfolio could be affected adversely, which, in turn, could adversely affect our financial position and results of operations. 



54
 

 
A number of our portfolio companies are in the Software-as-a-Service
industry and such companies are subject to additional risks that are unique to that industry, and the financial results of our portfolio
companies in the Software-as-a-Service industry could materially adversely affect our financial results. 

A number of our portfolio companies are in
the Software-as-a-Service (“SAAS”) industry and such companies are subject to additional risks that are unique to the
SAAS industry. For example, such portfolio companies may be subject to consumer protection laws that are enforced by regulators such
as the Federal Trade Commission (“FTC”) and private parties, and include statutes that regulate the collection and use
of information for marketing purposes. Any new legislation or regulations regarding the Internet, mobile devices, software sales or
export and/or the cloud or SAAS industry, and/or the application of existing laws and regulations to the Internet, mobile devices,
software sales or export and/or the cloud or SAAS industry, could create new legal or regulatory burdens on our portfolio companies
that could have a material adverse effect on their respective operations. In addition, our SAAS portfolio companies may incur
significant operating losses and negative cash flows during certain times of their respective life cycles, resulting in an adverse
impact on their operations and on their ability to repay their debt. Because our SAAS portfolio companies are generally investments
that are underwritten and valued on “recurring revenue” rather than EBITDA, the fair value determinations of such
companies are inherently uncertain and may fluctuate over short periods of time. They are also subject to the risks that their
customers have financial difficulties that make them unable or unwilling to pay for the software and services that drive a portfolio
company’s recurring revenue projections. There is often less collateral securing our loans to these companies as compared to
our other portfolio companies, which could impair our ability to be repaid if the portfolio companies default on their obligations
or otherwise encounter financial difficulties. For these reasons, our financial results could be materially adversely affected if
our portfolio companies in the SAAS industry encounter financial difficulty and fail to repay their obligations. As of February 29,
2024, our current total investments in SAAS companies were $664.7 million, or 58.4% of total investments. 

If our primary investments are deemed not to be qualifying assets,
we could be precluded from investing in our desired manner or deemed to be in violation of the 1940 Act. 

In order to maintain our status as a BDC, we
may not acquire any assets other than “qualifying assets” unless, at the time of and after giving effect to such acquisition,
at least 70.0% of our total assets are qualifying assets. We believe that most of the investments that we may acquire in the future will
constitute qualifying assets. However, we may be precluded from investing in what we believe are attractive investments if such investments
are not qualifying assets for purposes of the 1940 Act. If we do not invest a sufficient portion of our assets in qualifying assets,
we could violate the 1940 Act provisions applicable to BDCs and be precluded from making follow-on investments in existing
portfolio companies (which could result in the dilution of our position) or required to dispose of investments at inappropriate times
in order to come into compliance with the 1940 Act. If we need to dispose of such investments quickly, it could be difficult to dispose
of such investments on favorable terms. We may not be able to find a buyer for such investments and, even if we do find a buyer, we may
have to sell the investments at a substantial loss. Any such outcomes would have a material adverse effect on our business, financial
condition, results of operations and cash flows. Furthermore, any failure to comply with the requirements imposed on BDCs by the 1940
Act could cause the SEC to bring an enforcement action against us and/or expose us to claims of private litigants. If we do not maintain
our status as a BDC, we would be subject to regulation as a registered closed-end investment company under the 1940 Act. As
a registered closed-end investment company, we would be subject to substantially more regulatory restrictions under the 1940
Act, which would significantly decrease our operating flexibility. 

RISKS RELATED TO OUR COMMON STOCK 

Investing in our common stock may involve an above average degree
of risk. 

The investments we make in accordance with our
investment objective may result in a higher amount of risk than alternative investment options and volatility or loss of principal. Our
investments in portfolio companies may be highly speculative and aggressive, and therefore, an investment in our common stock may not
be suitable for someone with lower risk tolerance. 



55
 

 
We may choose to pay dividends in our own stock, in which case
you may be required to pay tax in excess of the cash you receive. 

We have in the past, and may in the future, distribute
taxable dividends that are payable to our stockholders in part through the issuance of shares of our common stock. For example, on October
30, 2013, our board of directors declared a dividend of $2.65 per share to shareholders payable in cash or shares of our common stock.
Under certain applicable provisions of the Code and the Treasury regulations and a revenue procedure issued by the IRS, a RIC may treat
a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire
distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be distributed to all stockholders
must be at least 20% of the aggregate declared distribution. If too many stockholders elect to receive their distributions in cash, we
must allocate the cash available for distribution among the shareholders electing to receive cash (with the balance of the distribution
paid in shares of our common stock). If we qualify as a publicly offered RIC and we decide to make any distributions consistent with
this revenue procedure that are payable in part in our stock, taxable stockholders receiving such dividends will be required to include
the full amount of the dividend (whether received in cash, our stock, or a combination thereof) as ordinary income (or as long-term capital
gain to the extent such distribution is properly reported as a capital gain dividend) to the extent of our current and accumulated earnings
and profits for U.S. federal income tax purposes. The value of the shares received by a stockholder is treated as income for U.S. federal
income tax purposes. A U.S. stockholder may have income from such a dividend in excess of the amount of cash received, and thus may be
required to obtain cash from other sources to pay any applicable U.S. federal income tax. If a U.S. stockholder sells the stock it receives
as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend,
depending on the market price of our stock at the time of the sale. 

Furthermore, with respect to non-U.S. stockholders,
we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that
is payable in stock. If a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on
dividends, it may put downward pressure on the trading price of our stock. 

Due to the current market conditions, we may defer our dividends
and choose to incur U.S. federal excise tax in order preserve cash and maintain flexibility. 

As a BDC, we are not required to make any distributions
to shareholders other than in connection with our election to be treated a RIC for U.S. federal income tax purposes as under Subchapter
M of the Code. In order to maintain our tax treatment as a RIC, we generally must distribute to shareholders for each taxable year at
least 90% of our investment company taxable income (i.e., net ordinary income plus realized net short-term capital gains in excess of
realized net long-term capital losses). If we qualify for taxation as a RIC, we generally will not be subject to U.S. federal income
tax on our investment company taxable income and net capital gains (i.e., realized net long- term capital gains in excess of realized
net short-term capital losses) that we timely distribute to shareholders. We will be subject to U.S. federal income tax on our investment
company taxable income and net capital gains that we do not timely distribute to shareholders. In addition, we will be subject to a nondeductible
4% U.S. federal excise tax on undistributed earnings of a RIC unless we distribute each calendar year at least the sum of (i) 98% of
our net ordinary income for the calendar year, (ii) 98.2% of our capital gain net income for the one-year period ending on October 31
of the calendar year, and (iii) any net ordinary income and capital gain net income that we recognized for preceding years, but were
not distributed during such years, and on which we paid no U.S. federal income tax. 

Under the Code, we may satisfy certain of our
RIC distributions with dividends paid after the end of the current calendar year. In particular, if we pay a distribution in January
of the following year that was declared in October, November, or December of the current year and is payable to shareholders of record
in the current year, the dividend will be treated for all U.S. federal tax purposes as if it were paid on December 31 of the current
year. In addition, under the Code, we may pay dividends, referred to as “spillover dividends,” that are paid during the following
taxable year that will allow us to maintain our qualification for taxation as a RIC and eliminate our liability for U.S. federal income
tax at corporate rates. Under these spillover dividend procedures, because our taxable year ends on February 28 or 29, we may defer distribution
of income earned during the current taxable year until February of the following taxable year. For example, we may defer distributions
of income earned during the year ended February 29, 2024 until as late as February 28, 2025. If we choose to carry-over this distribution
of income in the form of a spillover dividend, we will incur the 4% U.S. federal excise tax on some or all of the distribution. 

Due to current market conditions (as described
herein) it is possible that we may take certain actions with respect to the timing and amounts of our distributions in order to preserve
cash and maintain flexibility. For example, we may reduce our dividends and/or defer our dividends to the following taxable year. If
we defer our dividends, we may choose to utilize the spillover dividend rules discussed above and incur the 4% U.S. federal excise tax
on such amounts. To further preserve cash, we may combine these reductions or deferrals of dividends with one or more distributions that
are payable partially in our stock. (see “We may choose to pay dividends in our own stock, in which case you may be required to
pay tax in excess of the cash you receive” for more information). 



56
 

 


The market price of our common stock may fluctuate significantly. 

The market price and liquidity of the market for
our common stock may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related
to our operating performance. These factors include, but are not limited to: 



 
●
significant volatility in the market price and trading volume of securities of BDCs or other companies in our sector, which are not necessarily related to the operating performance of these companies;
 



 
●
changes in regulatory policies, accounting pronouncements or tax guidelines, particularly with respect to RICs, BDCs or SBICs;
 



 
●
failure to qualify for RIC tax treatment;
 



 
●
changes in the value of our portfolio of investments;
 



 
●
any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts;
 



 
●
departure of any of Saratoga Investment Advisors’ key personnel;
 



 
●
operating performance of companies comparable to us;
 



 
●
general economic trends and other external factors; or
 



 
●
loss of a major funding source.
 

Our business and operation could be negatively affected if we
become subject to any securities litigation or shareholder activism, which could cause us to incur significant expense, hinder execution
of investment strategy and impact our stock price. 

In the past, following periods of volatility in
the market price of a company’s securities, securities class action litigation has often been brought against that company. Shareholder
activism, which could take many forms or arise in a variety of situations, has been increasing in the BDC space recently. While we are
currently not subject to any securities litigation or shareholder activism, due to the potential volatility of our stock price and for
a variety of other reasons, we may in the future become the target of securities litigation or shareholder activism. Securities litigation
and shareholder activism, including potential proxy contests, could result in substantial costs and divert management’s and our
board of directors’ attention and resources from our business. 

Additionally, such securities litigation and shareholder
activism could give rise to perceived uncertainties as to our future, adversely affect our relationships with service providers and make
it more difficult to attract and retain qualified personnel. Also, we may be required to incur significant legal fees and other expenses
related to any securities litigation and activist shareholder matters. Further, our stock price could be subject to significant fluctuation
or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and shareholder activism. 

There is a risk that you may not receive distributions or that
our distributions may not grow over time. 

As a BDC for 1940 Act purposes and a RIC for U.S.
federal income tax purposes, we intend to make distributions out of assets legally available for distribution to our stockholders once
such distributions are authorized by our board of directors and declared by us. We cannot assure you that we will achieve investment results
that will allow us to make a specified level of cash distributions or periodically increase our dividend rate. In addition, due to the
asset coverage test that is applicable to us as a BDC, and provisions contained in the agreements governing our borrowings, we may be
limited in our ability to make distributions. Further, if we invest a greater amount of assets in equity securities that do not pay current
dividends, it could reduce the amount available for distribution. 



57
 

 
Provisions of our governing documents and the Maryland General
Corporation Law could deter future takeover attempts and have an adverse impact on the price of our common stock. 

We are governed by our charter and bylaws, which
we refer to as our “governing documents.” 

Our governing documents and the Maryland General
Corporation Law contain provisions that may have the effect of delaying, deferring or preventing a future transaction or change in control
of us that might involve a premium price for our stockholders or otherwise be in their best interest. 

Our charter provides for the classification of
our board of directors into three classes of directors, serving staggered three-year terms, which may render a change of control of us
or removal of our incumbent management more difficult. Furthermore, any and all vacancies on our board of directors will be filled generally
only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum,
and any director elected to fill a vacancy will serve for the remainder of the full term until a successor is elected and qualifies. 

Our board of directors is authorized to create
and issue new series of shares, to classify or reclassify any unissued shares of stock into one or more classes or series, including preferred
stock and, without stockholder approval, to amend our charter to increase or decrease the number of shares of stock that we have authority
to issue, which could have the effect of diluting a stockholder’s ownership interest. Prior to the issuance of shares of stock of
each class or series, including any reclassified series, our board of directors is required by our governing documents to set the terms,
preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications
and terms or conditions of redemption for each class or series of shares of stock. 

Our governing documents also provide that our
board of directors has the exclusive power to adopt, alter or repeal any provision of our bylaws, and to make new bylaws. The Maryland
General Corporation Law also contains certain provisions that may limit the ability of a third party to acquire control of us, such as: 



 
●
the Maryland Business Combination Act, which, subject to certain limitations, prohibits certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of the common stock or an affiliate thereof) for five years after the most recent date on which the stockholder becomes an interested stockholder and, thereafter, imposes special minimum price provisions and special stockholder voting requirements on these combinations; and
 



 
●
the Maryland Control Share Acquisition Act, which provides that “control shares” of a Maryland corporation (defined as shares of common stock which, when aggregated with other shares of common stock controlled by the stockholder, entitles the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares of common stock.
 

In addition, the provisions of the Maryland Business
Combination Act will not apply, however, if our board of directors adopts a resolution that any business combination between us and any
other person will be exempt from the provisions of the Maryland Business Combination Act. Although our board of directors has adopted
such a resolution, there can be no assurance that this resolution will not be altered or repealed in whole or in part at any time. If
the resolution is altered or repealed, the provisions of the Maryland Business Combination Act may discourage others from trying to acquire
control of us. 

As permitted by Maryland law, our bylaws contain
a provision exempting from the Maryland Control Share Acquisition Act any and all acquisitions by any person of our common stock. Although
our bylaws include such a provision, such a provision may also be amended or eliminated by our board of directors at any time in the future,
subject to obtaining confirmation from the SEC that it does not object to us being subject to the Maryland Control Share Acquisition Act. 

Our common stock may trade at a discount to our NAV per share. 

Common stock of BDCs, as closed-end investment
companies, frequently trade at a discount to NAV. Our common stock has traded at a discount to our NAV since shortly after our initial
public offering. The risk that our common stock may continue to trade at a discount to our NAV is separate and distinct from the risk
that our NAV per share may decline. 



58
 

 
Stockholders may incur dilution if we sell shares of our common
stock in one or more offerings at prices below the then current NAV per share of our common stock. 

The 1940 Act prohibits us from selling shares
of our common stock at a price below the current NAV per share of such stock, with certain exceptions. One such exception is prior stockholder
approval of issuances below NAV provided that our board of directors makes certain determinations. We do not currently have stockholder
approval of issuances below NAV. 

If we were to sell shares of our common stock
below NAV per share, such sales would result in an immediate dilution to the NAV per share. This dilution would occur as a result of the
sale of shares at a price below the then current NAV per share of our common stock and a proportionately greater decrease in a stockholder’s
interest in our earnings and assets and voting interest in us than the increase in our assets resulting from such issuance. 

Because the number of shares of common stock that
could be so issued and the timing of any issuance is not currently known, the actual dilutive effect cannot be predicted. 

The issuance of subscription rights, warrants or convertible
debt that are exchangeable for our common stock, will cause your economic interest and voting power in us to be diluted as a result of
our offering of any such securities. 

Stockholders who do not fully exercise rights,
warrants or convertible debt issued to them in any offering of subscription rights, warrants or convertible debt to purchase our common
stock should expect that they will, at the completion of the offering, own a smaller proportional economic interest and have diminished
voting power in us than would otherwise be the case if they fully exercised their rights, warrants or convertible debt. We cannot state
precisely the amount of any such dilution in share ownership or voting power because we do not know what proportion of the common stock
would be purchased as a result of any such offering. 

In addition, if the subscription price, warrant
price or convertible debt price is less than our NAV per share of common stock at the time of such offering, then our stockholders would
experience an immediate dilution of the aggregate NAV of their shares as a result of the offering. The amount of any such decrease in
NAV is not predictable because it is not known at this time what the subscription price, warrant price, convertible debt price or NAV
per share will be on the expiration date of such offering or what proportion of our common stock will be purchased as a result of any
such offering. The risk of dilution is greater if there are multiple rights offerings. However, our board of directors will make a good
faith determination that any offering of subscription rights, warrants or convertible debt would result in a net benefit to existing stockholders. 

Finally, our common stockholders will bear all
costs and expenses incurred by us in connection with any proposed offering of subscription rights, warrants or convertible debt that are
exchangeable for our common stock, whether or not such offering is actually completed by us. 

RISKS RELATED TO OUR NOTES  

The Notes are unsecured and therefore are effectively subordinated
to any existing and future secured indebtedness, including indebtedness under our Encina Credit Facility and our Live Oak Credit Facility. 

The Notes are not secured by any of our assets or any of the assets
of any of our subsidiaries, including our wholly owned subsidiaries. As a result, the Notes are effectively subordinated to any existing
and future secured indebtedness we or our subsidiaries have outstanding (including our Encina Credit Facility and our Live Oak Credit
Facility) or that we or our subsidiaries may incur in the future (or any indebtedness that is initially unsecured as to which we have
granted or subsequently grant a security interest) to the extent of the value of the assets securing such indebtedness, including, without
limitation, borrowings under our Encina Credit Facility and our Live Oak Credit Facility. In any liquidation, dissolution, bankruptcy
or other similar proceeding, the holders of any of our secured indebtedness or secured indebtedness of our subsidiaries may assert rights
against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be
used to pay other creditors, including the holders of the Notes. As of February 29, 2024, there was $35.0 million outstanding borrowings
under the Encina Credit Facility and we had the ability to borrow up to $65.0 million under the Encina Credit Facility, subject to certain
conditions. The Encina Credit Facility and the Live Oak Credit Facility is secured by substantially all of the assets of SIF II and SIF
III, respectively, wholly owned subsidiaries. 



59
 

 
The Notes are structurally subordinated to the indebtedness and
other liabilities of our subsidiaries. 

The Notes are obligations exclusively of Saratoga
Investment Corp., and not of any of our subsidiaries. None of our subsidiaries is a guarantor of the Notes and the Notes are not required
to be guaranteed by any subsidiary we may acquire or create in the future. Any assets of our subsidiaries are not directly available to
satisfy the claims of our creditors, including holders of the Notes. Except to the extent we are a creditor with recognized claims against
our subsidiaries, all claims of creditors of our subsidiaries will have priority over our equity interests in such entities (and therefore
the claims of our creditors, including holders of the Notes) with respect to the assets of such entities. Even if we are recognized as
a creditor of one or more of these entities, our claims would still be effectively subordinated to any security interests in the assets
of any such entity and to any indebtedness or other liabilities of any such entity senior to our claims. Consequently, the Notes are structurally
subordinated to all indebtedness and other liabilities of any of our existing or future indebtedness of our subsidiaries, including the
SBA-guaranteed debentures. These entities may incur substantial indebtedness in the future, all of which would be structurally senior
to the Notes. As of February 29, 2024, we had $214.0 million in SBA-guaranteed debentures outstanding. The indebtedness under the SBA-guaranteed
debentures is structurally senior to the Notes. 

The indenture under which the Notes are issued contains limited
protection for holders of the Notes. 

The indenture under which the Notes are issued
offers limited protection to holders of the Notes. 

The terms of the indenture and the Notes do not
restrict our or any of our subsidiaries’ ability to engage in, or otherwise be a party to, a variety of corporate transactions,
circumstances or events that could have a material adverse impact on your investment in the Notes. In particular, the terms of the indenture
and the Notes do not place any restrictions on our or our subsidiaries’ ability to: 



 
●
issue securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to the Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the Notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the Notes with respect to the assets of these entities, in each case other than an incurrence of indebtedness or other obligation that would cause a violation of Section 18(a)(1)(A) as modified by Section 61(a)(2) of the 1940 Act or any successor provisions, whether or not we continue to be subject to such provisions of the 1940 Act), but giving effect, in each case, to any exemptive relief granted to us by the SEC. Currently, these provisions generally prohibit us from incurring additional borrowings, including through the issuance of additional debt securities, unless our asset coverage, as defined in the 1940 Act, equals at least 150% after such borrowings;
 



 
●
sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets);
 



 
●
enter into transactions with affiliates;
 



 
●
create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions;
 



 
●
make investments; or
 



 
●
create restrictions on the payment of dividends or other amounts to us from our subsidiaries.
 

Furthermore, the terms of the indenture and the
Notes do not protect holders of the Notes in the event that we experience changes (including significant adverse changes) in our financial
condition, results of operations or credit ratings, if any, as they do not require that we or our subsidiaries adhere to any financial
tests or ratios or specified levels of net worth, revenues, income, cash flow, or liquidity. 



60
 

 
Our ability to recapitalize, incur additional
debt (including additional debt that matures prior to the maturity of the Notes), and take a number of other actions that are not limited
by the terms of the Notes may have important consequences for you as a holder of the Notes, including making it more difficult for us
to satisfy our obligations with respect to the Notes or negatively affecting the market value of the Notes. 

Other debt we issue or incur in the future could contain more protections
for its holders than the indenture and the Notes, including additional covenants and events of default. For example, the indenture under
which the Notes is issued do not contain cross-default provisions that are contained in the agreement relating to the Encina Credit Facility
and the Live Oak Credit Facility. The issuance or incurrence of any such debt with incremental protections could affect the market for,
trading levels and prices of the Notes. 

We may not be able to repurchase the 4.375% 2026 Notes and the
4.35% 2027 Notes upon a Change of Control Repurchase Event. 

Upon a Change of Control Repurchase Event (as
defined in the relevant indenture), holders of the 4.375% 2026 Notes and the 4.35% 2027 Notes may require us to repurchase for cash some
or all of the 4.375% 2026 Notes and the 4.35% 2027 Notes, respectively, at a repurchase price equal to 100% of the aggregate principal
amount of the 4.375% 2026 Notes and the 4.35% 2027 Notes, respectively, being repurchased, plus their respective accrued and unpaid interest
to, but not including, the repurchase date. We may not be able to repurchase the 4.375% 2026 Notes and the 4.35% 2027 Notes upon a Change
of Control Repurchase Event because we may not have sufficient funds. Our and our subsidiaries’ future financing facilities may
contain similar restrictions and provisions. Our failure to purchase such tendered 4.375% 2026 Notes and the 4.35% 2027 Notes upon the
occurrence of such Change of Control Repurchase Event would cause an event of default under the respective indenture governing the 4.375%
2026 Notes and the 4.35% 2027 Notes, respectively, which may result in the acceleration of such indebtedness requiring us to repay that
indebtedness immediately. If the holders of the 4.375% 2026 Notes and the 4.35% 2027 Notes exercise their respective right to require
us to repurchase the 4.375% 2026 Notes and the 4.35% 2027 Notes, respectively, upon a Change of Control Repurchase Event, the financial
effect of any such repurchase could cause a default under our current and future debt instruments, even if the Change of Control Repurchase
Event itself would not cause a default. If a Change of Control Repurchase Event were to occur, we may not have sufficient funds to repay
any such accelerated indebtedness. 

An active trading market for the Public Notes may not develop
or be sustained, which could limit the market price of the Public Notes or the ability to sell them. 

Although each of the 6.00% 2027 Notes, 8.00% 2027
Notes, 8.125% 2027 Notes, and 8.50% 2028 Notes are listed on the NYSE under the symbol “SAT”, “SAJ”, “SAY”,
and “SAZ”, respectively, we cannot provide any assurances that an active trading market will develop or be maintained for
the Public Notes or that the Public Notes will be able to be sold. At various times, the Public Notes may trade at a discount from their
initial offering price depending on prevailing interest rates, the market for similar securities, our credit ratings, if any, general
economic conditions, our financial condition, performance and prospects and other factors. Accordingly, we cannot provide any assurance
that a liquid trading market will develop for the Public Notes, or that the Public Notes will be able to be sold at a particular time
or at a favorable price. To the extent an active trading market does not develop, the liquidity and trading price for the Public Notes
may be harmed. At the same time, the trading market for the Public Notes may also be very volatile, and many of the risk factors related
to our common stock and outlined above in “Risks Related to Our Common Stock” could also be applicable to the Public Notes. 

Terms relating to redemption may materially adversely affect
the return on our Notes. 

Subject to their terms, we may redeem the Notes
from time to time, especially when prevailing interest rates are lower than the rate borne by the Notes. If prevailing rates are lower
at the time of redemption, you would not be able to reinvest the redemption proceeds in a comparable security at an effective interest
rate as high as the interest rate on the Notes being redeemed. Our redemption right also may adversely impact your ability to sell the
Notes as the optional redemption date or period approaches. 



61
 

 
The 6.00% 2027 Notes mature on April 30, 2027
and commencing April 27, 2024, may be redeemed in whole or in part at any time or from time to time at our option.   The 8.00% 2027
Notes mature on October 31, 2027 and commencing October 27, 2024, may be redeemed in whole or in part at any time or from time to time
at our option. The 8.125% 2027 Notes mature on December 31, 2027 and commencing December 13, 2024, may be redeemed in whole or in part
at any time or from time to time at our option. The 8.50% 2028 Notes mature on April 15, 2028 and commencing April 14, 2025, may be redeemed
in whole or in part at any time or from time to time at our option. 

The 4.375% 2026 Notes are redeemable, in whole
or in part, at any time at our option prior to November 28. 2025, at par plus a “make-whole” premium, and thereafter at par.
The 4.35% 2027 Notes are redeemable, in whole or in part, at any time at our option prior to November 28, 2026, at par plus a “make-whole”
premium, and thereafter at par. 

The 7.00% 2025 Notes mature on September 8, 2025
and commencing September 8, 2024, may be redeemed in whole or in part at any time or from time to time at our option, at par plus a “make-whole”
premium, and thereafter at par. The 7.75% Notes 2025 mature on July 9, 2025 and may be redeemed in whole or in part at any time or from
time to time at our option, subject to a fee depending on the date of repayment, at par plus a “make-whole” premium, and thereafter
at par.  The 6.25% 2027 Notes mature on December 29, 2027 and may be redeemed in whole or in part at any time or from time to time
at our option, on or after December 29, 2024, at par plus a “make-whole” premium, and thereafter at par. 

If we default on our obligations to pay our other indebtedness,
we may not be able to make payments on the Notes. 

Any default under the agreements governing our indebtedness, including
a default under the Encina Credit Facility or the Live Oak Credit Facility, indenture governing each of the Notes or other indebtedness
to which we may be a party that is not waived by the required lenders or the holders, and the remedies sought by the lenders or the holders
of such indebtedness could make us unable to pay principal, premium, if any, and interest on the Notes and substantially decrease the
market value of the Notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet
required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various
covenants, including financial and operating covenants, as applicable, in the instruments governing our indebtedness, we could be in default
under the terms of the agreements governing such indebtedness (including the Encina Credit Facility, the Live Oak Credit Facility and
the Notes). In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to
be due and payable, together with accrued and unpaid interest, the lenders under the Encina Credit Facility, the Live Oak Credit Facility,
or other debt we may incur in the future could elect to terminate their commitment, cease making further loans and institute foreclosure
proceedings against our assets, and we could be forced into bankruptcy or liquidation. In addition, any such default may constitute a
default under the Notes, which could further limit our ability to repay our debt, including the Notes. 

Our ability to generate sufficient cash flow in the future is, to some
extent, subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond
our control. We cannot assure you that our business will generate cash flow from operations, or that future borrowings will be available
to us under the Encina Credit Facility, the Live Oak Credit Facility, or otherwise, in an amount sufficient to enable us to meet our payment
obligations under the Notes, the Encina Credit Facility, and the Live Oak Credit Facility, and to fund other liquidity needs. 

If our operating performance declines and we are not able to generate
sufficient cash flow to service our debt obligations, we may, in the future, need to refinance or restructure our debt, including any
Notes sold, sell assets, reduce or delay capital investments, seek to raise additional capital or seek to obtain waivers from the required
lenders under the Encina Credit Facility or the Live Oak Credit Facility, the holders of the respective Notes, or other debt that we may
incur in the future to avoid being in default. If we are unable to implement one or more of these alternatives, we may not be able to
meet our payment obligations under the Notes and our other debt. If we breach our covenants under the Encina Credit Facility, the Live
Oak Credit Facility, the Notes or other debt and seek a waiver, we may not be able to obtain a waiver from the required lenders or the
holders thereof. If this occurs, we would be in default under the Encina Credit Facility, the Live Oak Credit Facility, the Notes or other
debt, the lenders or holders could exercise their rights as described above, and we could be forced into bankruptcy or liquidation. If
we are unable to repay debt, lenders having secured obligations could proceed against the collateral securing the debt.
 


62
 

 
ITEM 1B. UNRESOLVED STAFF COMMENTS
 
None.
 
ITEM 1C. CYBERSECURITY 

 
The
Company’s cybersecurity program is designed to identify, assess, and manage material risks from cybersecurity threats. The Company
relies on Saratoga Investment Advisors to implement the cybersecurity program. The cyber risk management program involves risk assessments
relating to the information systems of Saratoga Investment Advisors, incident response training and testing, implementation of security
measures, identification of sensitive information assets (“Critical Information”) and ongoing monitoring of systems and networks
and assessment of the associated risks on an annual basis, including networks on which the Company relies on. The Chief Compliance Officer,
along with the Company’s external information technology consultant (the “IT Consultant”), actively monitors the current
threat landscape in an effort to identify material risks arising from new and evolving cybersecurity threats. The Company and Saratoga
Investment Advisors have engaged external experts, including consultants, such as the IT Consultant, to evaluate cybersecurity measures
and risk management processes, and depends on and engages various third parties, including suppliers, vendors, and service providers.
The compliance team of the Company and Saratoga Investment Advisors will conduct ongoing due diligence of its significant service providers
to determine whether the cybersecurity programs of service providers include, among other things, procedures and safeguards designed to
ensure the protection of Critical Information and the information of the Company’s stockholders and portfolio companies, as well
as adequate responses in the case of a cybersecurity incident.
 

Board Oversight of Cybersecurity Risks
 
The
Board has the primary responsibility for overseeing and reviewing the guidelines and policies with respect to the Company’s risk
management, including risks associated with cybersecurity threats. The Chief Compliance Officer will periodically report to the Board
on cybersecurity matters, such as the overall state of the Company’s cybersecurity program, information on the current threat landscape,
and risks from cybersecurity threats and material cybersecurity incidents.
 

Management's Role in Cybersecurity Risk Management
 
The
Company’s management is responsible for assessing and managing material risks from cybersecurity threats, in consultations with
cybersecurity consultants. The compliance team of the Company will maintain effective disclosure controls and procedures to ensure timely
identification, consideration, and disclosure of material cybersecurity incidents, including through timely reporting to management and
the Board. The Chief Compliance Officer, in consultation with the IT Consultant, will periodically determine whether the Company requires
additional information technology or cybersecurity support.
 

Assessment of Cybersecurity Risk
 
The potential impact of risks from cybersecurity threats are assessed
on an ongoing basis, and how such risks could materially affect the Company’s business strategy, operational results, and financial
condition are regularly evaluated. During the reporting period, the Company has not identified any risks from cybersecurity threats, including
as a result of previous cybersecurity incidents, that the Company believes has materially affected, or are reasonably likely to materially
affect, the Company, including the Company’s business strategy, operational results, and financial condition.
 
ITEM 2. PROPERTIES
 
We do not own any real estate or other physical
properties important to our operations, however, an affiliate of our Investment Adviser leases office space for our executive offices
at 535 Madison Avenue, New York, New York 10022.
 
ITEM 3. LEGAL PROCEEDINGS
 
Neither we nor our wholly owned subsidiaries are
currently subject to any material legal proceedings. From time to time, we, our consolidated subsidiaries and/or Saratoga Investment Advisors
may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our
rights under contracts with our portfolio companies. Our business also is subject to extensive regulation, which may result in regulatory
proceedings against us.
 
ITEM 4. MINE SAFETY DISCLOSURES 
 
Not applicable.
 


63
 

 
PART II
 
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 
Price range of common stock 
 
Our common stock is traded on the NYSE under the
symbol “SAR.” The following table lists the high and low closing sale price for our
common stock, and the closing sale price as a percentage of NAV for each fiscal quarter during the last two most recently completed fiscal
years and any subsequent interim period.
 


  
   
Price
    Range  
Percentage of High Closing
    Sales Price as a Premium (Discount)  
Percentage of Low Closing
    Sales Price as a Premium (Discount) 

  
NAV(1)  
High  
Low  
to
    NAV(2)  
 to
    NAV(2) 

Fiscal Year Ending February 28, 2025 
   
   
   
   
  

First Quarter through May
    1, 2024 
$*  
$24.09  
$22.52  
 *  
 *. 

Fiscal Year Ended
    February 29, 2024 
    
    
    
    
   

First Quarter 
$28.48  
$28.10  
$22.82  
 (1.3)% 
 (19.9)%

Second Quarter 
$28.44  
$28.64  
$25.70  
 0.7% 
 (9.6)%

Third Quarter 
$27.42  
$26.60  
$23.05  
 (3.0)% 
 (15.9)%

Fourth Quarter 
$27.12  
$26.73  
$22.77  
 (1.4)% 
 (16.0)%

Fiscal Year Ended
    February 28, 2023 
    
    
    
    
   

First Quarter 
$28.69  
$28.31  
$24.98  
 (1.3)% 
 (12.9)%

Second Quarter 
$28.27  
$26.95  
$22.70  
 (4.7)% 
 (19.7)%

Third Quarter 
$28.25  
$27.16  
$20.36  
 (3.9)% 
 (27.9)%

Fourth Quarter 
$29.18  
$27.77  
$25.02  
 (4.8)% 
 (14.3)%

 

 


*Net asset value has not yet been calculated for this period.

 

(1)Net asset value per share is determined as of the last day in
the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low sales prices.

 

(2)Calculated as the respective high or low closing sales price
divided by the quarter end net asset value and subtracting 1.

 
Shares of BDCs may trade at a market price that
is less than the NAV of those shares. The possibilities that our shares of common stock will trade at a discount from NAV or at premiums
that are unsustainable over the long term are separate and distinct from the risk that our NAV will decrease. The last reported closing
sale price of our common stock on May 3, 2024 was $23.57 per share, which represents a discount of approximately 13.1% to the NAV of
$27.12 as of February 29, 2024. 
 


64
 

 
Summarized Financial Highlights
 
The following table summarizes ten years of financial highlights:
 


  
For the year ended 

Per share data 
February 29, 
2024  
February 28, 
2023  
February 28, 
2022  
February 28, 
2021  
February 29, 
2020 

Net asset value at beginning of period 
$29.18  
$29.33  
$27.25  
$27.13  
$23.62 

Net investment income(1) 
 4.49  
 2.94  
 1.74  
 2.07  
 1.59 

Net realized and unrealized gains (losses) on investments(1) 
 (3.77) 
 (0.75) 
 2.46  
 (0.74) 
 4.56 

Realized losses on extinguishment of debt* 
 (0.01) 
 (0.13) 
 (0.21) 
 (0.01) 
 (0.17)

Net increase in net assets resulting from operations 
 0.71  
 2.06  
 3.99  
 1.32  
 5.98 

Distributions declared from net investment income 
 (2.82) 
 (2.28) 
 (1.93) 
 (1.23) 
 (2.21)

Total distributions to stockholders 
 (2.82) 
 (2.28) 
 (1.93) 
 (1.23) 
 (2.21)

Issuance of common stock at net asset value (2) 
 (0.40) 
 -  
 -  
 -  
 - 

Capital contribution from manager for the issuance of common stock (8) 
 0.48  
 -  
 -  
 -  
 - 

Repurchases of common stock(3) 
 0.03  
 0.17  
 0.01  
 0.13  
 - 

Dilution(4) 
 (0.06) 
 (0.10) 
 -  
 (0.10) 
 (0.26)

Net asset value at end of period 
$27.12  
$29.18  
$29.33  
$27.25  
$27.13 

  
    
    
    
    
   

Per share market value at end of period 
$23.61  
$27.55  
$27.47  
$23.08  
$22.91 

Total return based on market value(5) 
 -3.92% 
 10.35% 
 28.19% 
 7.63% 
 9.28%

Total return based on net asset value(5)(6) 
 4.20% 
 9.46% 
 15.88% 
 7.31% 
 26.22%

Shares outstanding at end of period 
 13,653,476  
 11,890,500  
 12,131,350  
 11,161,416  
 11,217,545 

  
    
    
    
    
   

Ratio/Supplemental data: 
    
    
    
    
   

Net assets at end of period 
 370,224,108  
 346,958,042  
 355,780,523  
 304,185,770  
 304,286,853 

Ratio of total expenses to average net assets* 
 24.70% 
 18.91% 
 16.09% 
 13.11% 
 18.34%

Ratio of net investment income to average net assets* 
 16.01% 
 10.23% 
 6.05% 
 7.77% 
 6.31%

Portfolio turnover rate(7) 
 2.80% 
 24.05% 
 33.59% 
 25.26% 
 36.82%

 


  
For the year ended 

Per share data 
February 28, 
2019  
February 28, 
2018  
February 28, 
2017  
February 29, 
2016  
February 28, 
2015 

Net asset value at beginning of period 
$22.96  
$21.97  
$22.06  
$22.70  
$21.08 

Adoption of ASC 606 
 (0.01) 
 -  
 -  
 -  
 - 

Net asset value at beginning of period, as adjusted 
 22.95  
 21.97  
 22.06  
 22.70  
 21.08 

Net investment income(1) 
 2.60  
 2.11  
 1.94  
 1.91  
 1.80 

Net realized and unrealized gains (losses) on investments(1) 
 0.03  
 0.82  
 0.30  
 0.18  
 0.24 

Realized losses on extinguishment of debt* 
 -  
 -  
 (0.26) 
 -  
 - 

Net increase in net assets resulting from operations 
 2.63  
 2.93  
 2.24  
 2.09  
 2.04 

Distributions declared from net investment income 
 (2.06) 
 (1.90) 
 (1.93) 
 (2.36) 
 (0.40)

Total distributions to stockholders 
 (2.06) 
 (1.90) 
 (1.93) 
 (2.36) 
 (0.40)

Issuance of common stock above net asset value(2) 
 0.15  
 -  
 -  
 -  
 - 

Repurchases of common stock(3) 
 -  
 -  
 -  
 -  
 - 

Dilution(4) 
 (0.05) 
 (0.04) 
 (0.14) 
 (0.37) 
 (0.02)

Net asset value at end of period 
$23.62  
$22.96  
$21.97  
$22.06  
$22.70 

  
    
    
    
    
   

Per share market value at end of period 
$23.04  
$21.86  
$22.74  
$14.22  
$15.76 

Total return based on market value(5) 
 16.11% 
 5.28% 
 80.83% 
 4.27% 
 1.63%

Total return based on net asset value(5)(6) 
 13.33% 
 14.45% 
 12.62% 
 11.10% 
 10.09%

Shares outstanding at end of period 
 7,657,156  
 6,257,029  
 5,794,600  
 5,672,227  
 5,401,899 

  
    
    
    
    
   

Ratio/Supplemental data: 
    
    
    
    
   

Net assets at end of period 
 180,875,187  
 143,691,367  
 127,294,777  
 125,149,875  
 122,598,742 

Ratio of total expenses to average net assets* 
 19.12% 
 19.05% 
 17.27% 
 15.46% 
 14.85%

Ratio of net investment income to average net assets* 
 11.22% 
 9.37% 
 8.71% 
 8.52% 
 8.11%

Portfolio turnover rate(7) 
 35.26% 
 19.73% 
 43.76% 
 26.22% 
 31.28%

 

 



*
Certain prior period amounts have been reclassified to conform to current period presentation.

 
 

(1)
Per share amounts are calculated using the weighted average shares outstanding during the period.

 


65
 

 


(2)
The continuous issuance of common stock may cause an incremental decrease in NAV per share due to the sale of shares at the then prevailing public offering price and the receipt of net proceeds per share by the Company less than NAV per share on each subscription closing date. The per share data was derived by computing (i) the sum of (A) the number of shares issued in connection with subscriptions and/or distribution reinvestment on each share transaction date multiplied by (B) the differences between the net proceeds per share and the NAV per share on each share transaction date, divided by (ii) the total shares outstanding during the period.

 
 

(3)
Represents the anti-dilutive impact on the NAV per share of the Company due to the repurchase of common shares.  See Note 11, Stockholders’ Equity.

 
 

(4)
Represents the dilutive effect of issuing common stock
below NAV per share during the period in connection with the satisfaction of the Company’s annual RIC distribution requirement and may
include the impact of the different share amounts used for different items (weighted average basic common shares outstanding for the
corresponding year and actual common shares outstanding at the end of the year) in the per common share data calculation and rounding
impacts. See Note 13, Dividend.

 
 

(5)
Total investment return is calculated assuming a purchase of common shares at the current market value on the first day and a sale at the current market value on the last day of the periods reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Company’s DRIP. Total investment return does not reflect brokerage commissions.

 
 

(6)
Total investment return is calculated assuming a purchase of common shares at the current net asset value on the first day and a sale at the current net asset value on the last day of the periods reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Company’s DRIP. Total investment return does not reflect brokerage commissions.

 
 

(7)
Portfolio turnover rate is calculated using the lesser of year-to-date sales or year-to-date purchases over the average of the invested assets at fair value.

 
 

(8)
The Manager agreed to reimburse the Company to the extent the per share price of the shares to the public, less underwriting fees, was less than net asset value per share.

  
On September 24, 2014, the Company announced the
approval of an open market share repurchase plan that allowed it to repurchase up to 200,000 shares of its common stock at prices below
its NAV as reported in its then most recently published consolidated financial statements (the “Share Repurchase Plan”). Since
September 24, 2014, the Share Repurchase Plan has been extended annually, and the Company has periodically increased the amount of shares
of common stock that may be purchased under the Share Repurchase Plan, which, most recently, was increased to 1.7 million shares of common
stock. Most recently, on January 8, 2024, the Company’s board of directors extended the Share Repurchase Plan for another year to
January 15, 2025. As shown in the table below, as of February 29, 2024, the Company purchased an aggregate of 1,035,203 shares of common
stock, at the average price of $22.05 for approximately $22.8 million pursuant to the Share Repurchase Plan. During the three months ended
February 29, 2024, the Company did not purchase any shares of common stock pursuant to the Share Repurchase Plan. During the year ended
February 29, 2024, the Company purchased 88,576 shares of common stock, at the average price $24.36 for approximately $2.2 million pursuant
to the Share Repurchase Plan.
 


66
 

 


Period 
Total Number of Shares
 (or Units)
 Purchased  
Average Price per Share
 (or Unit)  
Total Number of Shares
 (or Units)
 Purchased as Part of Publicly Announced Plans or Programs  
Maximum Number (or Approximate Dollar Value) of Shares 
(or Units)
 that May Yet Be Purchased Under the Plans or Programs 

March 1, 2015 through November 30, 2015 
 2,500  
$15.59  
 2,500  
 397,500 

December 1, 2015 through December 31, 2015 
 -  
$-  
 2,500  
 397,500 

January 1, 2016 through January 31, 2016 
 4,200  
$13.86  
 6,700  
 393,300 

February 1, 2016 through February 29, 2016 
 18,717  
$13.86  
 25,417  
 374,583 

March 1, 2016 through March 31, 2016 
 16,282  
$14.57  
 41,699  
 358,301 

April 1, 2016 through April 30, 2016 
 7,858  
$16.22  
 49,557  
 350,443 

May 1, 2016 through May 31, 2016 
 21,357  
$16.29  
 70,914  
 329,086 

June 1, 2016 through June 30, 2016 
 8,310  
$16.50  
 79,224  
 320,776 

July 1, 2016 through July 31, 2016 
 19,212  
$17.31  
 98,436  
 301,564 

August 1, 2016 through August 31, 2016 
 40,058  
$17.44  
 138,494  
 261,506 

September 1, 2016 through September 30, 2016 
 40,221  
$18.04  
 178,715  
 221,285 

October 1, 2016 through October 31, 2016 
 27,076  
$18.10  
 205,791  
 394,209 

November 1, 2016 through November 30, 2016 
 8,600  
$18.24  
 214,391  
 385,609 

December 1, 2016 through December 31, 2016 
 4,100  
$18.57  
 218,491  
 381,509 

January 1, 2017 through February 29, 2020 
 -  
 -  
 218,491  
 381,509 

March 1, 2020 through February 28, 2021 
 190,321  
$18.96  
 408,812  
 891,188 

March 1, 2021 through February 28, 2022 
 99,623  
$25.55  
 508,435  
 791,565 

March 1, 2022 through February 28, 2023 
 438,192  
$24.70  
 946,627  
 353,373 

March 1, 2023 through February 29, 2024 
 88,576  
$24.36  
 1,035,203  
 664,797 

Total 
 1,035,203  
$22.05  
    
   

 
Holders 
 
As of May 3, 2024, there were 11
holders of record of our common stock.
 


67
 

 
Performance Graph
 
The following graph compares the return on our
common stock with that of the Standard & Poor’s 500 Stock Index, the NASDAQ Financial 100 index and the Standard & Poor’s
BDC Index, for the period from March 23, 2007, the date our common stock began trading, through February 29, 2024. The graph assumes that,
on March 23, 2007, a person invested $100 in each of our common stock, the Standard & Poor’s 500 Stock Index, the NASDAQ Financial
100 index and the Standard & Poor’s BDC Index. The graph measures total shareholder return, which takes into account both changes
in stock price and dividends. It assumes that dividends paid are reinvested in like securities.
 
  
Outstanding Securities and Debt
 
The following table shows our outstanding classes
of securities and debt as of February 29, 2024.
 


(a)
Title of Class 
(b)
Amount Authorized  
(c)
Amount Held by us or for Our Account  
(d)
Amount Outstanding Exclusive of Amounts Shown Under (c) 

Securities: 
   
   
  

Common Stock 
 100,000,000  
 11,890,500  
$88,109,500 

Debt: 
    
    
   

Encina credit facility 
$65,000,000  
$35,000,000  
$49,965,000 

SBA Debentures 
$325,000,000  
$214,000,000  
$47,000,000 

7.00% 2025 Notes 
$12,000,000  
$12,000,000  
$- 

7.75% 2025 Notes 
$5,000,000  
$5,000,000  
$- 

8.75% 2025 Notes 
$20,000,000  
$20,000,000  
$- 

4.375% 2026 Notes 
$175,000,000  
$175,000,000  
$- 

4.35% 2027 Notes 
$75,000,000  
$75,000,000  
$- 

6.00% 2027 Notes 
$105,500,000  
$105,500,000  
$- 

6.25% 2027 Notes 
$15,000,000  
$15,000,000  
$- 

8.00% 2027 Notes 
$46,000,000  
$46,000,000  
$- 

8.125% 2027 Notes 
$60,375,000  
$60,375,000  
$- 

8.50% 2028 Notes 
$57,500,000  
$57,500,000  
$- 

 


68
 

 
FEES AND EXPENSES 
 
The following table is intended to assist you
in understanding the costs and expenses that an investor will bear directly or indirectly. We caution you that some of the percentages
indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this report contains a
reference to fees or expenses paid by “you,” “us” or “Saratoga Investment Corp.,” or that “we”
will pay fees or expenses, stockholders will indirectly bear such fees or expenses as investors in Saratoga Investment Corp.
 


Stockholder transaction expenses (as a percentage of offering price): 
  


Sales load paid 
-%(1)


Offering expenses borne by us 
-%(2)


Dividend reinvestment plan expenses 
 None(3)


Total stockholder transaction expenses paid 
 -%


Annual estimated expenses (as a percentage of average net assets attributable to common stock): 
   


Base management fees 
 5.4%(4)


Incentive fees payable under the Management Agreement 
 2.3%(5)


Interest payments on borrowed funds 
 13.8%(6)


Other expenses 
 3.2%(7)


Total annual expenses 
 24.7%(8)


 

 




(1)
In the event that the shares of common stock are sold to or through underwriters, a corresponding prospectus supplement will disclose the applicable sales load.

 


(2)
The prospectus supplement corresponding to each offering will disclose the applicable offering expenses and total stockholder transaction expenses.

 


(3)
The expenses associated with the administration of our dividend reinvestment plan are included in “Other expenses.” The participants in the dividend reinvestment plan will pay a pro rata share of brokerage commissions incurred with respect to open market purchases, if any, made by the administrator under the dividend reinvestment plan. 

 


(4)
Our base management fee under the Management Agreement with Saratoga Investment Advisors is based on our gross assets, which is defined as our total assets, including those acquired using borrowings for investment purposes, but excluding cash and cash equivalents. See “Investment Advisory and Management Agreement” in Part I, Item 1 of this Annual Report. The fact that our base management fee is payable based upon our gross assets, rather than our net assets (i.e., total assets after deduction of any liabilities, including borrowings) means that our base management fee as a percentage of net assets attributable to common stock will increase when we utilize leverage.

 


(5)
The incentive fee consists of two parts. The first part is calculated and payable quarterly in arrears and equals 20% of our “pre-incentive fee net investment income” for the immediately preceding quarter, subject to a preferred return, or “hurdle,” and a “catch up” feature. For this purpose, “pre-incentive fee net investment income” means interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence, managerial and consulting fees or other fees that we receive from portfolio companies) accrued by us during the fiscal quarter, minus our operating expenses for the quarter (including the base management fee, expenses payable under the administration agreement described below, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). The second part of the incentive fee is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Management Agreement) and equals 20% of our “incentive fee capital gains,” which equals our realized capital gains on a cumulative basis from May 31, 2010 through the end of the year, if any, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fee. Under the Management Agreement, the capital gains portion of the incentive fee is based on realized gains and realized and unrealized losses from May 31, 2010. Therefore, realized and unrealized losses incurred prior to such time will not be taken into account when calculating the capital gains portion of the incentive fee, and Saratoga Investment Advisors will be entitled to 20% of incentive fee capital gains that arise after May 31, 2010. In addition, the cost basis for computing realized gains and losses on investments held by us as of May 31, 2010 will equal the fair value of such investments as of such date. See “Investment Advisory and Management Agreement.”

 


69
 

 


(6)
We may borrow funds from time to time to make investments to the extent we determine that the economic situation is conducive to doing so. The 13.8% figure in the table includes all expected borrowing costs that we expect to incur over the next twelve months in connection with Encina Credit Facility. The costs associated with our outstanding borrowings are indirectly borne by our stockholders. We do not expect to issue any preferred stock during the next twelve months and, therefore, have not included the cost of issuing and servicing preferred stock in the table. In addition, all of the commitment fees, interest expense, amortized financing costs of our Credit Facility, SBA debentures and the 7.00% 2025 Notes, 7.75% 2025 Notes, 4.375% 2026 Notes, the 4.35% 2027 Notes,  6.00% 2027 Notes, the 6.25% 2027 Notes, the 8.00% 2027 Notes, the 8.125% 2027 Notes, and the 8.50% 2028 Notes, and the fees and expenses of issuing and servicing any other borrowings or leverage that we expect to incur during the next twelve months are included in the table and expense example presentation below. On April 16, 2018, our board of directors, including a majority of our independent directors, approved the Company becoming subject to a minimum asset coverage ratio of 150%, which became effective on April 16, 2019. See “Business Development Company Regulations” in Part I, Item 1 of this Annual Report and “Risk Factors—Risks Related to Our Business and Structure—Effective April 16, 2019, our asset coverage requirement was reduced from 200% to 150%, which may increase the risk of investing in the Company” in Part I, Item 1A of this Annual Report.

 


(7)
“Other expenses” are based on estimated amounts for the current fiscal year and include our overhead expenses, including payments under our administration agreement based on our allocable portion of overhead and other expenses incurred by Saratoga Investment Advisors in performing its obligations under the administration agreement. See “Administration Agreement.”

 


(8)
This figure includes all of the fees and expenses of our wholly owned subsidiaries, Saratoga Investment Corp SBIC LP, Saratoga Investment Corp SBIC II LP, Saratoga Investment Corp SBIC III LP, Saratoga Investment Funding LLC and Saratoga Investment Funding II LLC, except SLF JV.  As SLF JV is structured as a private joint venture, with control and management shared equally between us and TJHA, no management fees are paid by SLF JV.  Furthermore, this table reflects all of the fees and expenses borne by us with respect to our investment in Saratoga CLO.  

 
Example
 
The following example demonstrates the projected dollar amount of total
cumulative expenses over various periods with respect to a hypothetical $1,000 investment in our common stock, assuming an asset coverage
ratio of 161.1% (the Company’s actual asset coverage as of February 29, 2024) and total annual expenses of 24.7% of net assets
attributable to common stock as set forth in the fees and expenses table above, and (x) a 5.0% annual return resulting entirely from
net realized capital gains (none of which is subject to the incentive fee) and (y) a 5.0% annual return resulting entirely from net
realized capital gains (all of which is subject to the incentive fee based on capital gains). Transaction expenses are included in the
following example. This example and the expenses in the table above should not be considered a representation of our future expenses,
and actual expenses (including cost of debt, if any, and other expenses) may be greater or less than those shown.
 


  
1 Year  
3 Years  
5 years  
10 years 

Assuming a 5% annual return on portfolio resulting entirely from net realized capital gains (none of which is subject to the capital gains incentive fee)(1) 
$253  
$798  
$1,399  
$3,184 

Assuming a 5% annual return resulting entirely from net realized capital gains (all of which is subject to incentive fee based on capital gains)(2) 
$263  
$830  
$1,454  
$3,310 

 

 




(1)
Assumes that we will not realize any capital gains computed net of all realized capital losses and unrealized capital depreciation.

 


(2)
Assumes no unrealized capital depreciation and a 5% annual return resulting entirely from net realized capital gains and therefore subject to the incentive fee based on capital gains. Because our investment strategy involves investments that generate primarily current income, we believe that a 5% annual return resulting entirely from net realized capital gains is unlikely.

 


70
 

 
This example and the expenses in the table
above should not be considered a representation of our future expenses, and actual expenses (including the cost of debt, if any, and other
expenses) may be greater or less than those shown.
 
The foregoing table is to assist you in understanding
the various costs and expenses that an investor in our common stock will bear directly or indirectly. While the example assumes, as required
by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%. Both examples assume that
the 5% annual return will be generated entirely through net realized capital gains and, as a result, will trigger the payment of the capital
gains portion of the incentive fee under the investment advisory agreement. Any potential income portion of the incentive fee under the
investment advisory agreement is not included in the example. If we achieve sufficient returns on our investments, including through net
realized capital gains, to trigger an incentive fee of a material amount, our expenses, and returns to our investors, would be higher.
In addition, while the example assumes reinvestment of all dividends and distributions at NAV, under certain circumstances, reinvestment
of dividends and other distributions under our dividend reinvestment plan may occur at a price per share that differs from NAV.
 
Sales of unregistered securities 
 
All sales
of unregistered securities during the year ended February 29, 2024 were reported in a Form 8-K or Quarterly Report on Form 10-Q filed
with the SEC. 
 
Issuer purchases of equity securities 
 
During the year ended February 29, 2024, February
28, 2023 and February 28, 2022, we purchased 88,576, 438,192 and 99,623 shares, respectfully of our common stock in the open market.
 
The following table summarizes the purchased common
stock on a month to month basis for the year ended February 29, 2024:
 


Period 
Quantity 

March 1, 2023 through March 31, 2023 
 60,000 

April 1, 2023 through April 30, 2023 
 15,000 

May 1, 2023 through May 31, 2023 
 13,576 

June 1, 2023 through June 30, 2023 
 - 

July 1, 2023 through July 31, 2023 
 - 

August 1, 2023 through August 31, 2023 
 - 

September 1, 2023 through September 30, 2023 
 - 

October 1, 2023 through October 31, 2023 
 - 

November 1, 2023 through November 30, 2023 
 - 

December 1, 2023 through December 31, 2023 
 - 

January 1, 2024 through January 31, 2024 
 - 

February 1, 2024 through February 29, 2024 
 - 

Total 
 88,576 

 
ITEM 6. - Reserved
 
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 
 
The following discussion should be read in conjunction
with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Annual Report
on Form 10-K. In addition to historical information, the following discussion and other parts of this Annual Report contain forward-looking
information that involves risks and uncertainties. Our actual results could differ materially from those anticipated by such forward-looking
information due to the factors discussed under Part I. Item 1A. “Risk Factors” and “Note about Forward-Looking Statements”
appearing elsewhere herein.
 


71
 

 
The forward-looking statements are based on our
beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These
beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or are
within our control. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from
those expressed in our forward-looking statements.
 
The forward-looking statements contained in this Annual Report on Form
10-K involve risks and uncertainties, including statements as to:
 


 
●
our future operating results;

 


 
●
the introduction, withdrawal, success and timing of business initiatives and strategies;

 


 
●
changes in political, economic or industry conditions, the interest rate environment or financial and capital markets, which could result in changes in the value of our assets;

 


 
●
the relative and absolute investment performance and operations of our Manager;

 


 
●
the impact of increased competition;

 


 
●
our ability to turn potential investment opportunities into transactions and thereafter into completed and successful investments;

 


 
●
the unfavorable resolution of any future legal proceedings;

 


 
●
our business prospects and the operational and financial performance of our portfolio companies, including their ability to achieve our respective objectives as a result of the current economic conditions caused by, among other things, the COVID-19 pandemic, elevated levels of inflation, and a rising interest rate environment, and the effects of the disruptions caused thereby on our ability to continue to effectively manage our business;

 

●interest
rate volatility, including the replacement of LIBOR with alternate reference rates and the high  interest rate environment, could adversely
affect our results, particularly if we elect to use leverage as part of our investment strategy;

 


 
●
the impact of investments that we expect to make and future acquisitions and divestitures;

 


 
●
our contractual arrangements and relationships with third parties;

 


 
●
the dependence of our future success on the general economy and its impact on the industries in which we invest;

 


 
●
the ability of our portfolio companies to achieve their objectives;

 


 
●
our expected financings and investments;

 


 
●
our regulatory structure and tax treatment, including our ability to operate as a business development company (“BDC”), or to operate our small business investment company (“SBIC”) subsidiaries, and to continue to qualify to be taxed as a regulated investment company (“RIC”);

 


72
 

 


 
●
the adequacy of our cash resources and working capital;

 


 
●
the timing of cash flows, if any, from the operations of our portfolio companies;

 


 
●
the impact of supply chain constraints and labor difficulties on our portfolio companies and the global economy;

 
 
 

 
●
the elevated level of inflation, and its impact on our portfolio companies and on the industries in which we invest;

 


 
●
the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to us or our Manager;

 


 
●
the impact of changes to tax legislation and, generally, our tax position;

 


 
●
our ability to access capital and any future financings by us;

 


 
●
the ability of our Manager to attract and retain highly talented professionals; and

 


 
●
the ability of our Manager to locate suitable investments for us and to monitor and effectively administer our investments.

 
Such forward-looking statements may include statements
preceded by, followed by or that otherwise include terms such as “anticipate,” “believe,” “could,”
“estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “project,”
“should,” “will” and “would” or the negative of these terms or other comparable terminology.
 
We have based the forward-looking statements included
in this Annual Report on Form 10-K on information available to us on the date of this Annual Report on Form 10-K, and we assume no obligation
to update any such forward-looking statements. Actual results could differ materially from those anticipated in our forward-looking statements,
and future results could differ materially from historical performance. We undertake no obligation to revise or update any forward-looking
statements, whether as a result of new information, future events or otherwise, unless required by law or SEC rule or regulation. You
are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with
the U.S. Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, quarterly reports on Form
10-Q and current reports on Form 8-K.
 
The following analysis of our financial condition
and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto contained
elsewhere in this annual report on Form 10-K.
 
OVERVIEW
 
We are a Maryland corporation that has elected
to be treated as a BDC under the Investment Company Act of 1940, as amended (the “1940 Act”). Our investment objective is
to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from our investments. We invest
primarily in senior and unitranche leveraged loans and mezzanine debt issued by private U.S. middle-market companies, which we define
as companies having earnings before interest, tax, depreciation and amortization (“EBITDA”) of between $2 million and $50
million, both through direct lending and through participation in loan syndicates. We may also invest up to 30.0% of the portfolio in
opportunistic investments in order to seek to enhance returns to stockholders. Such investments may include investments in distressed
debt, which may include securities of companies in bankruptcy, foreign debt, private equity, securities of public companies that are not
thinly traded and structured finance vehicles such as collateralized loan obligation funds. Although we have no current intention to do
so, to the extent we invest in private equity funds, we will limit our investments in entities that are excluded from the definition of
“investment company” under Section 3(c)(1) or Section 3(c)(7) of the 1940 Act, which includes private equity funds, to no
more than 15.0% of our net assets. We have elected and qualified to be treated as a RIC under Subchapter M of the Internal Revenue Code
of 1986, as amended (the “Code”).
 


73
 

 
Corporate History
 
We commenced operations, at the time known as
GSC Investment Corp., on March 23, 2007 and completed an initial public offering of shares of common stock on March 28, 2007. Prior to
July 30, 2010, we were externally managed and advised by GSCP (NJ), L.P., an entity affiliated with GSC Group, Inc. In connection with
the consummation of a recapitalization transaction on July 30, 2010, as described below we engaged Saratoga Investment Advisors to replace
GSCP (NJ), L.P. as our investment adviser and changed our name to Saratoga Investment Corp.
 
Our wholly owned subsidiaries, Saratoga Investment
Corp. SBIC LP (“SBIC LP”), Saratoga Investment Corp. SBIC II LP (“SBIC II LP”), and Saratoga Investment Corp.
SBIC III LP (“SBIC III LP”, and together with SBIC LP and SBIC II LP, the “SBIC Subsidiaries”), received SBIC
licenses from the SBA on March 28, 2012, August 14, 2019, and September 29, 2022, respectively. SBIC LP’s license provided up to
$150.0 million in additional long-term capital in the form of SBA debentures, while SBIC II LP’s and SBIC III LP’s SBIC licenses
each provide up to $175.0 million. Under current SBIC regulations, for two or more SBICs under common control, the maximum amount of outstanding
SBA debentures cannot exceed $350.0 million with at least $175.0 million in combined regulatory capital. With all debentures repaid to
the SBA, SBIC LP’s license was surrendered on January 3, 2024, providing the Company access to all undistributed capital of SBIC
LP.
 
 On February 26, 2021, we completed the fourth
refinancing of the Saratoga CLO. This refinancing, among other things, extended the Saratoga CLO reinvestment period to April 2024, and
extended its legal maturity to April 2033, and added a non-call period ending February 2022. In addition, and as part of the refinancing,
the Saratoga CLO was upsized from $500 million in assets to approximately $650 million. As part of this refinancing and upsizing, we invested
an additional $14.0 million in all of the newly issued subordinated notes of the Saratoga CLO, and purchased $17.9 million in aggregate
principal amount of the Class F-R-3 Notes tranche at par. Concurrently, the existing $2.5 million of Class F-R-2 Notes, $7.5 million of
Class G-R-2 Notes and $25.0 million CLO 2013-1 Warehouse 2 Loan were repaid. We also paid $2.6 million of transaction costs related to
the refinancing and upsizing on behalf of the Saratoga CLO, to be reimbursed from future equity distributions. At August 31, 2021,
the outstanding receivable of $2.6 million was repaid.
 
We have formed a wholly owned special purpose
entity, Saratoga Investment Funding II LLC, a Delaware limited liability company (“SIF II”), for the purpose of entering into
a $50.0 million senior secured revolving credit facility with Encina Lender Finance, LLC (the “Lender”), supported by loans
held by SIF II and pledged to the Lender under the credit facility (the “Encina Credit Facility). The Encina Credit Facility closed
on October 4, 2021. During the first two years following the closing date, SIF II may request an increase in the commitment amount under
the Encina Credit Facility to up to $75.0 million. The terms of the Encina Credit Facility require a minimum drawn amount of $12.5 million
at all times during the first six months following the closing date, which increases to the greater of $25.0 million or 50% of the commitment
amount in effect at any time thereafter. The term of the Encina Credit Facility is three years. Advances under the Encina Credit Facility
bear interest at a floating rate per annum equal to LIBOR plus 4.0%, with LIBOR having a floor of 0.75%, with customary provisions related
to our and the Lender’s selection of a replacement benchmark rate. Concurrently with the closing of the Encina Credit Facility,
all remaining amounts outstanding on our existing revolving credit facility with Madison Capital Funding, LLC were repaid and the facility
was terminated. On January 27, 2023, among other things, the borrowings available under the Encina Credit Facility was increased from
up to $50.0 million to up to $65.0 million, the underlying benchmark rate used to compute interest changed from LIBOR to Term SOFR for
one-month tenor plus a 0.10% credit spread adjustment; the applicable effective margin rate on borrowings increased from 4.00% to 4.25%
and the maturity date was extended from October 4, 2024 to January 27, 2026.
 
On October 26, 2021, we entered into a Limited
Liability Company Agreement with TJHA JV I LLC (“TJHA”) to co-manage Saratoga Senior Loan Fund I JV LLC (“SLF JV”).
SLF JV is invested in Saratoga Investment Corp Senior Loan Fund 2021-1 Ltd (“SLF 2021”), which is a wholly owned subsidiary
of SLF JV. SLF 2021 was formed for the purpose of making investments in a diversified portfolio of broadly syndicated first lien and second
lien term loans or bonds in the primary and secondary markets.
 


74
 

 
On September 30, 2022, SLF 2021 was renamed to
Saratoga Investment Corp Senior Loan Fund 2022-1, Ltd. (“SLF 2022”).
 
We and TJHA have equal voting interest on all
material decisions with respect to SLF JV, including those involving its investment portfolio, and equal control of corporate governance.
No management fee is charged to SLF JV as control and management of SLF JV is shared equally.
 
We and TJHA have committed to provide up to a
combined $50.0 million of financing to SLF JV through cash contributions, where we provided $43.75 million and TJHA provides $6.25 million,
resulting in an 87.5% and 12.5% ownership between the two parties. The financing is issued in the form of an unsecured note and equity.
The unsecured note will pay a fixed rate of 10.0% per annum and is due and payable in full on October 20, 2033. As of February 29, 2024,
our and TJHA’s investment in SLF JV consisted of an unsecured note of $17.6 million and $2.5 million, respectively; and membership
interest of $17.6 million and $2.5 million, respectively. As of February 28, 2023, the Company and TJHA’s investment in SLF JV consisted
of an unsecured note of $17.6 million and $2.5 million, respectively; and membership interest of $17.6 million and $2.5 million, respectively.
As of February 29, 2024, and February 28, 2023, the Company’s investment in the unsecured note of SLF JV had a fair value of $15.8
million and $17.6 million, respectively, and the Company’s investment in the membership interests of SLF JV had a fair value of
$9.4 million and $13.1 million, respectively.
 
SLF JV’s initial investment in SLF 2022
was in the form of an unsecured loan. The unsecured loan paid a floating rate of LIBOR plus 7.00% per annum and was paid in full on June
9, 2023. The unsecured loan was repaid in full on October 28, 2022, as part of the CLO closing.
 
We have determined that SLF JV is an investment
company under (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services—Investment
Companies; however, in accordance with such guidance we will generally not consolidate our investment in a company other than a wholly
owned investment company subsidiary. SLF JV is not a wholly owned investment company subsidiary as we and TJHA each have an equal 50%
voting interest in SLF JV and thus neither party has a controlling financial interest. Furthermore, FASB ASC Topic 810, Consolidation,
concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate
the joint venture since neither has control. Accordingly, we do not consolidate SLF JV.
 
On October 28, 2022, SLF 2022 issued $402.1 million
of debt through the JV CLO trust. The 2022 JV CLO Notes were issued pursuant to the JV Indenture, with the Trustee. As part of the transaction,
we purchased 87.50% of the Class E Notes from SLF 2022 with a par value of $12.25 million. As of February 29, 2024 and February 28, 2023,
the fair value of these Class E Notes were $12.3 million and $11.4 million, respectively.
  
Critical Accounting Policies and Estimates
 
Basis of Presentation
 
The preparation of financial statements in accordance
with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make certain estimates and assumptions
affecting amounts reported in our consolidated financial statements. We have identified investment valuation, revenue recognition and
the recognition of capital gains incentive fee expense as our most critical accounting estimates. We continuously evaluate our estimates,
including those related to the matters described below. These estimates are based on the information that is currently available to us
and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from
those estimates under different assumptions or conditions. A discussion of our critical accounting policies and estimates follows.
 


75
 

 
Investment Valuation
 
We account for investments at fair value in accordance
with the FASB ASC Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value, establishes a framework
for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure
requirements for fair value measurements. Under ASC 820 we are required to assume that its investments are to be sold or its liabilities
are to be transferred at the balance sheet date in the principal market to independent market participants, or in the absence of a principal
market, in the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in
the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.
 
Investments for which market quotations are readily
available are fair valued at such market quotations obtained from independent third-party pricing services and market makers subject to
any decision by our board of directors to approve a fair value determination to reflect significant events affecting the value of these
investments. We value investments for which market quotations are not readily available at fair value as approved, in good faith, by our
board of directors based on input from Saratoga Investment Advisors, the audit committee of our board of directors and a third party independent
valuation firm. We use multiple techniques for determining fair value based on the nature of the investment and experience with those
types of investments and specific portfolio companies. The selections of the valuation techniques and the inputs and assumptions used
within those techniques often require subjective judgements and estimates. These techniques include market comparables, discounted cash
flows and enterprise value waterfalls. Fair value is best expressed as a range of values from which we determines a single best estimate.
The types of inputs and assumptions that may be considered in determining the range of values of our investments include the nature and
realizable value of any collateral, the portfolio company’s ability to make payments, market yield trend analysis and volatility
in future interest rates, call and put features, the markets in which the portfolio company does business, comparison to publicly traded
companies, discounted cash flows and other relevant factors.
 
We undertake a multi-step valuation process each
quarter when valuing investments for which market quotations are not readily available, as described below:
 


 
●
each investment is initially valued by the responsible investment professionals of Saratoga Investment Advisors and preliminary valuation conclusions are documented and discussed with our senior management; and

 


 
●
an independent valuation firm engaged by our board of directors independently reviews a selection of these preliminary valuations each quarter so that the valuation of each investment for which market quotes are not readily available is reviewed by the independent valuation firm at least once each fiscal year. We use a third-party independent valuation firm to value our investment in the subordinated notes of Saratoga CLO and the Class F-2-R-3 Notes tranche of the Saratoga CLO every quarter.

 
In addition, all our investments are subject to the following
valuation process:
 


 
●
the audit committee of our board of directors reviews and approves each preliminary valuation and Saratoga Investment Advisors and an independent valuation firm (if applicable) will supplement the preliminary valuation to reflect any comments provided by the audit committee; and

 


 
●
our board of directors discusses the valuations and approves the fair value of each investment, in good faith, based on the input of Saratoga Investment Advisors, independent valuation firm (to the extent applicable) and the audit committee of our board of directors.

 
Our investment in Saratoga CLO is carried at fair
value, which is based on a discounted cash flows that utilizes prepayment, re-investment and loss assumptions based on historical experience
and projected performance, economic factors, the characteristics of the underlying cash flow, and market comparables for equity interests
in collateralized loan obligation funds similar to Saratoga CLO, when available, as determined by Saratoga Investment Advisors and recommended
to our board of directors. Specifically, we use Intex cash flows, or an appropriate substitute, to form the basis for the valuation of
our investment in Saratoga CLO. The cash flows use a set of inputs including projected default rates, recovery rates, reinvestment rates
and prepayment rates in order to arrive at estimated valuations. The inputs are based on available market data and projections provided
by third parties as well as management estimates. We use the output from the Intex models (i.e., the estimated cash flows) to perform
a discounted cash flow analysis on expected future cash flows to determine a valuation for our investment in Saratoga CLO.
 


76
 

 
Rule 2a-5 under the 1940 Act (“Rule 2a-5”)
establishes a regulatory framework for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits boards, subject
to board oversight and certain other conditions, to designate the investment adviser to perform fair value determinations. Rule 2a-5 also
defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining whether
a fund must determine the fair value of a security. Rule 31a-4 under the 1940 Act (“Rule 31a-4”) provides the recordkeeping
requirements associated with fair value determinations. While our board of directors has not elected to designate Saratoga Investment
Advisors as the valuation designee, we has adopted certain revisions to its valuation policies and procedures in order comply with the
applicable requirements of Rule 2a-5 and Rule 31a-4.
    
Revenue Recognition
 
Income Recognition
 
Interest income, adjusted for amortization of
premium and accretion of discount, is recorded on an accrual basis to the extent that such amounts are expected to be collected. The Company
stops accruing interest on its investments when it is determined that interest is no longer collectible. Discounts and premiums on investments
purchased are accreted/amortized over the life of the respective investment using the effective yield method. The amortized cost of investments
represents the original cost adjusted for the accretion of discounts and amortization of premiums on investments.
  
Loans are generally placed on non-accrual status
when there is reasonable doubt that principal or interest will be collected. Accrued interest is generally reserved when a loan is placed
on non-accrual status. Interest payments received on non-accrual loans may be recognized as a reduction in principal depending upon management’s
judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid and,
in management’s judgment, are likely to remain current, although we may make exceptions to this general rule if the loan has sufficient
collateral value and is in the process of collection.
 
Payment-in-Kind Interest
 
We hold debt and preferred equity investments
in our portfolio that contain a payment-in-kind (“PIK”) interest provision. The PIK interest, which represents contractually
deferred interest added to the investment balance that is generally due at maturity, is generally recorded on the accrual basis to the
extent such amounts are expected to be collected. We stop accruing PIK interest if we do not expect the issuer to be able to pay all principal
and interest when due.
 
Revenues
 
We generate revenue in the form of interest income
and capital gains on the debt investments that we hold and capital gains, if any, on equity interests that we may acquire. We expect our
debt investments, whether in the form of leveraged loans or mezzanine debt, to have terms of up to ten years, and to bear interest at
either a fixed or floating rate. Interest on debt will be payable generally either quarterly or semi-annually. In some cases, our debt
or preferred equity investments may provide for a portion or all of the interest to be PIK. To the extent interest is PIK, it will be
payable through the increase of the principal amount of the obligation by the amount of interest due on the then-outstanding aggregate
principal amount of such obligation. The principal amount of the debt and any accrued but unpaid interest will generally become due at
the maturity date. In addition, we may generate revenue in the form of commitment, origination, structuring, amendment, redemption or
diligence fees, fees for providing managerial assistance or investment management services and possibly consulting fees. Any such fees
will be generated in connection with our investments and recognized as earned. We may also invest in preferred equity or common equity
securities that pay dividends on a current basis.
 
On January 22, 2008, we entered into a collateral
management agreement with Saratoga CLO, pursuant to which we act as its collateral manager. The Saratoga CLO was initially refinanced
in October 2013 with its reinvestment period extended to October 2016. On November 15, 2016, we completed a second refinancing of the
Saratoga CLO with its reinvestment period extended to October 2018.
 


77
 

 
On December 14, 2018, we completed a third refinancing
and upsize of the Saratoga CLO. The third Saratoga CLO refinancing, among other things, extended its reinvestment period to January 2021,
and extended its legal maturity date to January 2030, and added a non-call period of January 2020. Following this refinancing, the Saratoga
CLO portfolio increased from approximately $300.0 million in aggregate principal amount to approximately $500.0 million of predominantly
senior secured first lien term loans. In addition to refinancing its liabilities, we invested an additional $13.8 million in all of the
newly issued subordinated notes of the Saratoga CLO and also purchased $2.5 million in aggregate principal amount of the Class F-R-2 and
$7.5 million aggregate principal amount of the Class G-R-2 notes tranches at par, with a coupon of 3M USD LIBOR plus 8.75% and 3M USD
LIBOR plus 10.00%, respectively. As part of this refinancing, we also redeemed our existing $4.5 million aggregate amount of the Class
F notes tranche at par and the $20.0 million CLO 2013-1 Warehouse Loan was repaid.
 
On February 11, 2020, we entered into an unsecured
loan agreement (“CLO 2013-1 Warehouse 2 Loan”) with Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd (“CLO 2013-1
Warehouse 2”), a wholly owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse 2 may borrow from time
to time up to $20.0 million from the Company in order to provide capital necessary to support warehouse activities. On October 23,
2020, the availability under the CLO 2013-1 Warehouse 2 Loan was increased to $25.0 million, which was immediately fully drawn and, which
expires on August 20, 2021. The interest rate was also amended to be based on a pricing grid, starting at an annual rate of 3M USD LIBOR
+ 4.46%. During the fourth quarter ended February 28, 2021, the CLO 2013-1 Warehouse 2 Ltd was repaid in full.
 
On February 26, 2021, we completed the fourth
refinancing of the Saratoga CLO. This refinancing, among other things, extended the Saratoga CLO reinvestment period to April 2024, extended
its legal maturity to April 2033, and added a non-call period of February 2022. In addition, and as part of the refinancing, the Saratoga
CLO was upsized from $500 million in assets to approximately $650 million. As part of this refinancing and upsizing, the Company
invested an additional $14.0 million in all of the newly issued subordinated notes of the Saratoga CLO, and purchased $17.9 million
in aggregate principal amount of the Class F-R-3 Notes tranche at par. Concurrently, the existing $2.5 million of
Class F-R-2 Notes, $7.5 million of Class G-R-2 Notes and $25.0 million of the CLO 2013-1 Warehouse 2 Loan were repaid.
We also paid $2.6 million of transaction costs related to the refinancing and upsizing on behalf of the Saratoga CLO, to be reimbursed
from future equity distributions. At August 31, 2021, the outstanding receivable of $2.6 million was repaid in full.
 
On August 9, 2021, we exchanged our existing $17.9
million Class F-R-3 Notes for $8.5 million Class F-1-R-3 Notes and $9.4 million Class F-2-R-3 Notes at par. On August 11, 2021, we sold
our Class F-1-R-3 Notes to third parties, resulting in a realized loss of $0.1 million.
 
The Saratoga CLO remains effectively 100% owned
and managed by Saratoga Investment Corp. We receive a base management fee of 0.10% per annum and a subordinated management fee of 0.40%
per annum of the outstanding principal amount of Saratoga CLO’s assets, paid quarterly to the extent of available proceeds. Prior
to the second refinancing and the issuance of the 2013-1 Amended CLO Notes, we received a base management fee of 0.25% per annum and a
subordinated management fee of 0.25% per annum of the outstanding principal amount of Saratoga CLO’s assets, paid quarterly to the
extent of available proceeds.
 
Following the third refinancing and the issuance
of the 2013-1 Reset CLO Notes on December 14, 2018, we are no longer entitled to an incentive management fee equal to 20.0% of excess
cash flow to the extent the Saratoga CLO subordinated notes receive an internal rate of return paid in cash equal to or greater than 12.0%.
 
Interest income on our investment in Saratoga
CLO is recorded using the effective interest method in accordance with the provisions of FASB ASC Topic 325-40, Investments-Other, Beneficial
Interests in Securitized Financial Assets, based on the anticipated yield and the estimated cash flows over the projected life of the
investment. Yields are revised when there are changes in actual or estimated cash flows due to changes in prepayments and/or re-investments,
credit losses or asset pricing. Changes in estimated yield are recognized as an adjustment to the estimated yield over the remaining life
of the investment from the date the estimated yield was changed.
 


78
 

 
Expenses
 
Our primary operating expenses include the payment
of investment advisory and management fees, professional fees, directors and officers insurance, fees paid to directors who are not “interested
persons” (as defined in Section 2(a)(19) of the 1940 Act) of the Company (“independent directors”) and administrator
expenses, including our allocable portion of our administrator’s overhead. Our investment advisory and management fees compensate
our Manager for its work in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other costs and
expenses of our operations and transactions, including those relating to:
 


 
●
organization;

 


 
●
calculating our net asset value (“NAV”) (including the cost and expenses of any independent valuation firm);

 


 
●
expenses incurred by our Manager payable to third parties, including agents, consultants or other advisers, in monitoring our financial and legal affairs and in monitoring our investments and performing due diligence on our prospective portfolio companies;

 


 
●
expenses incurred by our Manager payable for travel and due diligence on our prospective portfolio companies;

 


 
●
interest payable on debt, if any, incurred to finance our investments;

 


 
●
offerings of our common stock and other securities;

 


 
●
investment advisory and management fees;

 


 
●
fees payable to third parties, including agents, consultants or other advisers, relating to, or associated with, evaluating and making investments;

 


 
●
transfer agent and custodial fees;

 


 
●
federal and state registration fees;

 


 
●
all costs of registration and listing our common stock on any securities exchange;

 


 
●
U.S. federal, state and local taxes;

 


 
●
independent directors’ fees and expenses;

 


 
●
costs of preparing and filing reports or other documents required by governmental bodies (including the Securities and Exchange Commission (the “SEC”) and the SBA);

 


 
●
costs of any reports, proxy statements or other notices to common stockholders including printing costs;

 


 
●
our fidelity bond, directors and officers errors and omissions liability insurance, and any other insurance premiums;

 


 
●
direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs; and

 


 
●
administration fees and all other expenses incurred by us or, if applicable, the administrator in connection with administering our business (including payments under the Administration Agreement based upon our allocable portion of the administrator’s overhead in performing its obligations under an Administration Agreement, including rent and the allocable portion of the cost of our officers and their respective staffs (including travel expenses)).

 
Pursuant to the investment advisory and management
agreement that we had with GSCP (NJ), L.P., our former investment adviser and administrator, we had agreed to pay GSCP (NJ), L.P. as investment
adviser a quarterly base management fee of 1.75% of the average value of our total assets (other than cash or cash equivalents but including
assets purchased with borrowed funds) at the end of the two most recently completed fiscal quarters and an incentive fee.
 


79
 

 
The incentive fee had two parts:
 


 
●
A fee, payable quarterly in arrears, equal to 20.0% of our pre-incentive fee net investment income, expressed as a rate of return on the value of the net assets at the end of the immediately preceding quarter, that exceeded a 1.875% quarterly hurdle rate measured as of the end of each fiscal quarter. Under this provision, in any fiscal quarter, our investment adviser received no incentive fee unless our pre-incentive fee net investment income exceeded the hurdle rate of 1.875%. Amounts received as a return of capital were not included in calculating this portion of the incentive fee. Since the hurdle rate was based on net assets, a return of less than the hurdle rate on total assets could still have resulted in an incentive fee.

 


 
●
A fee, payable at the end of each fiscal year, equal to 20.0% of our net realized capital gains, if any, computed net of all realized capital losses and unrealized capital depreciation, in each case on a cumulative basis on each investment in our portfolio, less the aggregate amount of capital gains incentive fees paid to the investment adviser through such date.

 
We deferred cash payment of any incentive fee
otherwise earned by our former investment adviser if, during the then most recent four full fiscal quarters ending on or prior to the
date such payment was to be made, the sum of (a) our aggregate distributions to our stockholders and (b) our change in net assets (defined
as total assets less liabilities) (before taking into account any incentive fees payable during that period) was less than 7.5% of our
net assets at the beginning of such period. These calculations were appropriately pro-rated for the first three fiscal quarters of operation
and adjusted for any share issuances or repurchases during the applicable period. Such incentive fee would become payable on the next
date on which such test had been satisfied for the most recent four full fiscal quarters or upon certain terminations of the investment
advisory and management agreement. We commenced deferring cash payment of incentive fees during the quarterly period ended August 31,
2007 and continued to defer such payments through the quarterly period ended May 31, 2010. As of July 30, 2010, the date on which GSCP
(NJ), L.P. ceased to be our investment adviser and administrator, we owed GSCP (NJ), L.P. $2.9 million in fees for services previously
provided to us; of which $0.3 million has been paid by us. GSCP (NJ), L.P. agreed to waive payment by us of the remaining $2.6 million
in connection with the consummation of the stock purchase transaction with Saratoga Investment Advisors and certain of its affiliates
described elsewhere in this Annual Report.
 
The terms of the investment advisory and management
agreement with Saratoga Investment Advisors, our current investment adviser, are substantially similar to the terms of the investment
advisory and management agreement we had entered into with GSCP (NJ), L.P., our former investment adviser, except for the following material
distinctions in the fee terms:
 


 
●
The capital gains portion of the incentive fee was reset with respect to gains and losses from May 31, 2010, and therefore losses and gains incurred prior to such time will not be taken into account when calculating the capital gains fee payable to Saratoga Investment Advisors and, as a result, Saratoga Investment Advisors will be entitled to 20.0% of net gains that arise after May 31, 2010. In addition, the cost basis for computing realized gains and losses on investments held by us as of May 31, 2010 equal the fair value of such investment as of such date. Under the investment advisory and management agreement with our former investment adviser, GSCP (NJ), L.P., the capital gains fee was calculated from March 21, 2007, and the gains were substantially outweighed by losses.

 


 
●
Under the “catch up” provision, 100.0% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income that exceeds 1.875% but is less than or equal to 2.344% in any fiscal quarter is payable to Saratoga Investment Advisors. This will enable Saratoga Investment Advisors to receive 20.0% of all net investment income as such amount approaches 2.344% in any quarter, and Saratoga Investment Advisors will receive 20.0% of any additional net investment income. Under the investment advisory and management agreement with our former investment adviser, GSCP (NJ), L.P. only received 20.0% of the excess net investment income over 1.875%.

 


 
●
We will no longer have deferral rights regarding incentive fees in the event that the distributions to stockholders and change in net assets is less than 7.5% for the preceding four fiscal quarters.

 


80
 

 
Capital Gains Incentive Fee
 
We record an expense accrual relating to the capital
gains incentive fee payable by us to the Manager when the unrealized gains on its investments exceed all realized capital losses on its
investments given the fact that a capital gains incentive fee would be owed to the Manager if we were to liquidate our investment portfolio
at such time. The actual incentive fee payable to the Company’s Manager related to capital gains will be determined and payable
in arrears at the end of each fiscal year and will include only realized capital gains for the period.
 
Recent Accounting Pronouncements 
 
In June 2022, the FASB issued Accounting Standards
Update (“ASU”) 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820)
(“ASU 2022-03”), which clarifies that a contractual sale restriction prohibiting the sale of an equity security is a characteristic
of the reporting entity holding the equity security and is not included in the equity security’s unit of account. Accordingly, an
entity should not consider the contractual sale restriction when measuring the equity security’s fair value. In addition, ASU 2022-03
prohibits an entity from recognizing a contractual sale restriction as a separate unit of account. ASU 2022-03’s amendments are
effective for fiscal years beginning after December 15, 2023, with early adoption permitted. We are currently evaluating the impact of
the adoption of ASU 2022-03 on our consolidated financial statements.
 
In March 2020, the FASB issued Reference
Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) to
provide optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial
reporting. ASU 2020-04 established Topic 848 to provide relief during the temporary transition period and includes a sunset provision
based on expectations of when the London Interbank Offered Rate (“LIBOR”) would cease being published. In December 2022, the
FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which deferred the sunset
day of this guidance to December 31, 2024. With the adoption of ASU 2022-06, there was no significant impact to our consolidated financial
position.
 
In December 2023, the FASB issued ASU 2023-09, Improvements
to Income Tax Disclosures. The amendments in this update require more disaggregated information on income taxes paid. ASU 2023-09
is effective for years beginning after December 15, 2024. Early adoption is permitted, however the Company has not elected to adopt this
provision as of the date of the financial statements contained in this report. The Company is still assessing the impact of the new guidance.
However, it does not expect ASU 2023-09 to have a material impact on the consolidated financial statements and the notes thereto.
 
Portfolio and investment activity 
 
Investment Portfolio Overview
 


  
February 29, 
2024  
February 28, 
2023  
February 28, 
2022 

  
($ in millions) 

Number of investments(1) 
 139  
 115  
 94 

Number of portfolio companies(2) 
 55  
 49  
 45 

Average investment per portfolio company(2) 
$20.1  
$19.0  
$17.3 

Average investment size(1) 
$8.1  
$8.3  
$8.4 

Weighted average maturity(3) 
 2.5 yrs  
 2.9 yrs  
 2.9 yrs 

Number of industries(5) 
 43  
 40  
 38 

Non-performing or delinquent investments (fair value) 
$18.9  
$9.8  
$- 

Fixed rate debt (% of interest earning portfolio)(3) 
$5.5(0.5)% 
$8.2(1.0)% 
$16.9(2.5)%

Fixed rate debt (weighted average current coupon)(3) 
 15.0% 
 12.2% 
 10.0%

Floating rate debt (% of interest earning portfolio)(3) 
$997.9(99.5)% 
$817.1(99.0)% 
$671.2(97.5)%

Floating rate debt (weighted average current spread over SOFR)(3)(4) 
 7.5% 
 7.0% 
 7.1%

 

 


(1)Excludes our investment in the subordinated notes of Saratoga
CLO.

 

(2)At February 29, 2024, excludes our investment in the subordinated notes
of Saratoga CLO and Class F-2-R-3 Notes tranche, as well as the unsecured notes and equity interests in the SLF JV and the Class E Note
tranche of the SLF 2022. At February 28, 2023, excludes our investment in the subordinated notes of Saratoga CLO and Class F-2-R-3 Notes
tranche, as well as the unsecured notes and equity interests in the SLF JV and the Class E Note tranche of the SLF 2022. At February 28,
2022, excludes our investment in the subordinated notes of Saratoga CLO, Class F-2-R-3 Note tranche, as well as the unsecured notes and
equity interests in the SLF JV.

 


81
 

 

(3)Excludes our investment in the subordinated notes of Saratoga
CLO and equity interests, as well as the unsecured notes and equity interests in SLF JV and the Class E Note tranche of the SLF 2022.

 

(4)Calculation uses either 1-month or 3-month SOFR, depending on the contractual
terms, and after factoring in any existing SOFR floors.

 

(5)Our investment in the subordinated notes of Saratoga CLO and
Class F-R-3 Note tranche, as well as the unsecured notes and equity interests in the SLF JV and the Class E note tranche of the SLF 2022
are included in Structured Finance Securities industry.

 
During the fiscal year ended February 29, 2024,
we invested $246.1 million in new and existing portfolio companies and had $30.3 million in aggregate amount of exits and repayments resulting
in net investments of $215.8 million for the year.
 
During the fiscal year ended February 28, 2023,
we invested $385.1 million in new and existing portfolio companies and had $222.2 million in aggregate amount of exits and repayments
resulting in net investments of $162.9 million for the year.
 
During the fiscal year ended February 28, 2022,
we invested $458.1 million in new and existing portfolio companies and had $226.9 million in aggregate amount of exits and repayments
resulting in net investments of $231.1 million for the year.
 
Portfolio Composition
 
Our portfolio composition at February 29, 2024, February 28, 2023 and
February 28, 2022 at fair value was as follows:
 


  
February 29, 2024  
February 28, 2023  
February 28, 2022 

  
Percentage of Total Portfolio  
Weighted Average Current Yield  
Percentage of Total Portfolio  
Weighted Average Current Yield  
Percentage of Total Portfolio  
Weighted Average Current Yield 

First lien term loans 
 85.7% 
 12.6% 
 82.1% 
 12.3% 
 77.3% 
 8.3%

Second lien term loans 
 1.6  
 5.1  
 1.5  
 5.3  
 5.4  
 11.1 

Unsecured loans 
 1.4  
 11.1  
 2.1  
 9.8  
 1.9  
 9.7 

Structured finance securities 
 2.7  
 10.3  
 4.3  
 7.4  
 4.7  
 10.5 

Equity interests 
 8.6  
 -  
 10.0  
 -  
 10.7  
 - 

Total 
 100.0% 
 11.4% 
 100.0% 
 10.7% 
 100.0% 
 7.7%

 
At February 29, 2024, our investment in the subordinated
notes of Saratoga CLO, a collateralized loan obligation fund, had a fair value of $9.5 million and constituted 0.8% of our portfolio.
This investment constitutes a first loss position in a portfolio that, as of February 29, 2024 and February 28, 2023, was composed of
$640.8 million and $658.0 million, respectively, in aggregate principal amount of primarily senior secured first lien term loans. In
addition, as of February 29, 2024, we also own $9.4 million in aggregate principal of the F-2-R-3 Notes in the Saratoga CLO, which only
rank senior to the subordinated notes.
 


82
 

 

This investment is subject to unique risks.
(See “Part 1. Item 1A. Risk Factors—Our investment in Saratoga CLO constitutes a leveraged investment in a portfolio of
subordinated notes representing the lowest-rated securities issued by a pool of predominantly senior secured first lien term loans
and is subject to additional risks and volatility. All losses in the pool of loans will be borne by our subordinated notes and only
after the value of our subordinated notes is reduced to zero will the higher-rated notes issued by the pool bear any losses”).
We do not consolidate the Saratoga CLO portfolio in our consolidated financial statements. Accordingly, the metrics below do not
include the underlying Saratoga CLO portfolio investments. However, at February 29, 2024, $603.0 million or 99.2% of the Saratoga
CLO portfolio investments in terms of market value had a CMR color rating of green or yellow and two of the Saratoga CLO portfolio
investments were in default with a fair value of $0.3 million. At February 28, 2023, $544.4 million or 89.8% of the Saratoga CLO portfolio investments in terms of
market value had a CMR color rating of green or yellow and two Saratoga CLO portfolio investments were in default with a fair value
of $2.8 million. For more information relating to Saratoga CLO, see the audited financial statements for Saratoga CLO included
elsewhere herein.
 
Saratoga Investment Advisors normally grades all
of our investments using a credit and monitoring rating system (“CMR”). The CMR consists of a single component: a color rating.
The color rating is based on several criteria, including financial and operating strength, probability of default, and restructuring risk.
The color ratings are characterized as follows: (Green)—performing credit; (Yellow)—underperforming credit; (Red)—in
principal payment default and/or expected loss of principal.
 
Portfolio CMR distribution
 
The CMR distribution of our investments at February 29, 2024
and February 28, 2023 was as follows:
 
Saratoga Investment Corp.
 


  
February 29, 2024  
February 28, 2023 

Color Score 
Investments at Fair
    Value  
Percentage
 of Total
 Portfolio  
Investments at Fair
    Value  
Percentage
 of Total
 Portfolio 

  
($ in thousands) 

Green 
$1,000,298  
 87.8% 
$808,791  
 83.2%

Yellow 
 12,643  
 1.1  
 34,172  
 3.5 

Red 
 6,273  
 0.6  
 -  
 0.0 

N/A(1) 
 119,580  
 10.5  
 129,627  
 13.3 

Total 
$1,138,794  
 100.0% 
$972,590  
 100.0%

 
 


(1)Comprised of our investment in the subordinated notes of
Saratoga CLO and equity interests.

 
The change in reserve from $2.2 million as of February 28, 2023 to
$9.5 million as of February 29, 2024 was primarily related to the non-accrual of interest income related to our investments in Knowland
Group, Pepper Palace and Zollege.
 
The CMR distribution of Saratoga CLO investments at February
29, 2024 and February 28, 2023 was as follows:
 
Saratoga CLO
 


  
February 29, 2024  
February 28, 2023 

Color Score 
Investments at Fair
    Value  
Percentage
 of Total
 Portfolio  
Investments at Fair
    Value  
Percentage
 of Total
 Portfolio 

  
($ in thousands) 

Green 
$560,384  
 92.2% 
$544,424  
 89.9%

Yellow 
 42,580  
 7.0  
 40,812  
 6.7 

Red 
 3,568  
 0.6  
 20,718  
 3.4 

N/A(1) 
 1,020  
 0.2  
 0  
 0.0 

Total 
$607,552  
 100.0% 
$605,954  
 100.0%

 

 


(1)Comprised of Saratoga CLO’s equity interests.

 


83
 

 
Portfolio composition by industry grouping at fair
value
 
The following table shows our portfolio composition by industry
grouping at fair value at February 29, 2024 and February 28, 2023:
 
Saratoga Investment Corp.
 


  
February 29, 2024  
February 28, 2023 

 
Investments At Fair
    Value  
Percentage
 of Total
 Portfolio  
Investments At Fair
    Value  
Percentage
 of Total
 Portfolio 

  
($ in thousands) 

Healthcare Software 
$120,500  
 10.8% 
$119,124  
 12.2%

IT Services 
 78,422  
 6.9  
 87,167  
 9.0 

Consumer Services 
 64,689  
 5.7  
 63,642  
 6.6 

HVAC Services and Sales 
 59,208  
 5.2  
 54,450  
 5.6 

Real Estate Services 
 52,350  
 4.6  
 53,406  
 5.5 

Healthcare Services 
 51,094  
 4.5  
 26,286  
 2.7 

Education Software 
 45,579  
 4.0  
 44,955  
 4.6 

Hospitality/Hotel 
 41,447  
 3.6  
 37,972  
 3.9 

Dental Practice Management 
 40,235  
 3.5  
 1,000  
 0.1 

Mental Healthcare Services 
 37,377  
 3.3  
 16,922  
 1.7 

Health/Fitness Franchisor 
 32,032  
 2.8  
 -  
 0.0 

Structured Finance Securities(1) 
 30,626  
 2.7  
 41,363  
 4.4 

Sports Management 
 27,000  
 2.4  
 26,711  
 2.7 

Talent Acquisition Software 
 26,896  
 2.4  
 25,999  
 2.7 

Financial Services 
 26,276  
 2.3  
 26,218  
 2.7 

Research Software 
 26,255  
 2.3  
 10,677  
 1.1 

Education Services 
 25,819  
 2.3  
 34,489  
 3.5 

Architecture & Engineering Software 
 25,247  
 2.2  
 -  
 0.0 

Investment Fund 
 25,222  
 2.2  
 30,726  
 3.2 

Association Management Software 
 24,089  
 2.1  
 -  
 0.0 

Direct Selling Software 
 24,073  
 2.1  
 25,771  
 2.7 

Restaurant 
 22,580  
 2.0  
 24,826  
 2.6 

Mentoring Software 
 22,069  
 1.9  
 21,359  
 2.2 

Legal Software 
 20,709  
 1.8  
 20,699  
 2.1 

Insurance Software 
 19,821  
 1.7  
 16,761  
 1.7 

Roofing Contractor Software 
 19,014  
 1.7  
 -  
 0.0 

Marketing Orchestration Software 
 18,420  
 1.6  
 18,715  
 1.9 

Corporate Education Software 
 18,026  
 1.6  
 15,254  
 1.6 

Non-profit Services 
 16,267  
 1.4  
 13,095  
 1.3 

Employee Collaboration Software 
 14,150  
 1.2  
 13,052  
 1.3 

Lead Management Software 
 12,120  
 1.1  
 12,090  
 1.2 

Alternative Investment Management Software 
 10,779  
 0.9  
 10,459  
 1.1 

Field Service Management 
 10,708  
 0.9  
 9,958  
 1.0 

Financial Services Software 
 9,916  
 0.9  
 9,096  
 0.9 

Fire Inspection Business Software 
 9,916  
 0.9  
 -  
 0.0 

Industrial Products 
 9,095  
 0.8  
 9,608  
 1.0 

Office Supplies 
 7,181  
 0.6  
 6,373  
 0.7 

Veterinary Services 
 4,753  
 0.4  
 -  
 0.0 

Staffing Services 
 3,288  
 0.3  
 2,079  
 0.2 

Cyber Security 
 2,826  
 0.2  
 2,509  
 0.3 

Specialty Food Retailer 
 2,489  
 0.2  
 -  
 0.0 

Facilities Maintenance 
 231  
 0.0  
 408  
 0.0 

Specialty Food Retailer 
 -  
 0.0  
 24,411  
 2.5 

Dental Practice Management 
 -  
 0.0  
 11,151  
 1.1 

Corporate Education Software 
 -  
 0.0  
 3,809  
 0.4 

Healthcare Supply 
 -  
 0.0  
 -  
 0.0 

Total 
$1,138,794  
 100.0% 
$972,590  
 100.0%

 

 


(1)As of February 29, 2024, comprised of our investment in the
subordinated notes and F-2-R-3 Notes of Saratoga CLO, as well as the unsecured notes and equity interests in the SLF JV and E-Notes of
SLF 2022. As of February 28, 2023, comprised of our investment in the subordinated notes and Class F-2-R-3 Notes of Saratoga CLO, as
well as the unsecured notes and equity interests in the SLF JV.



84
 

 
The following table shows Saratoga CLO’s portfolio
composition by industry grouping at fair value at February 29, 2024 and February 28, 2023:
 
Saratoga CLO
 


  
February 29, 2024  
February 28, 2023 

 
Investments at Fair
    Value  
Percentage
 of Total
 Portfolio  
Investments at Fair
    Value  
Percentage
 of Total
 Portfolio 

  
($ in thousands) 

Banking, Finance, Insurance & Real Estate 
$116,253  
 19.0% 
$114,570  
 18.9%

Services: Business 
 65,524  
 10.8  
 65,947  
 10.9 

High Tech Industries 
 50,996  
 8.4  
 52,636  
 8.7 

Healthcare & Pharmaceuticals 
 40,453  
 6.7  
 38,952  
 6.4 

Services: Consumer 
 30,433  
 5.0  
 34,544  
 5.7 

Chemicals, Plastics, & Rubber 
 30,219  
 5.0  
 23,857  
 3.9 

Retail 
 26,339  
 4.3  
 24,049  
 4.0 

Telecommunications 
 22,718  
 3.7  
 22,514  
 3.7 

Media: Advertising, Printing & Publishing 
 20,265  
 3.3  
 20,309  
 3.4 

Hotel, Gaming & Leisure 
 20,217  
 3.3  
 14,315  
 2.4 

Automotive 
 20,007  
 3.3  
 20,410  
 3.4 

Consumer goods: Durable 
 17,555  
 2.9  
 24,887  
 4.1 

Containers, Packaging & Glass 
 17,138  
 2.8  
 18,239  
 3.0 

Construction & Building 
 16,663  
 2.7  
 13,875  
 2.3 

Beverage, Food & Tobacco 
 13,150  
 2.2  
 14,501  
 2.4 

Aerospace & Defense 
 13,068  
 2.2  
 13,688  
 2.3 

Media: Broadcasting & Subscription 
 10,778  
 1.8  
 11,143  
 1.8 

Consumer goods: Non-durable 
 10,698  
 1.8  
 13,734  
 2.3 

Media: Diversified & Production 
 10,390  
 1.7  
 9,279  
 1.5 

Transportation: Cargo 
 8,890  
 1.5  
 8,236  
 1.4 

Utilities: Oil & Gas 
 8,046  
 1.3  
 7,246  
 1.2 

Wholesale 
 7,255  
 1.2  
 8,011  
 1.3 

Capital Equipment 
 5,694  
 0.9  
 8,450  
 1.4 

Transportation: Consumer 
 4,720  
 0.8  
 6,844  
 1.1 

Metals & Mining 
 4,256  
 0.7  
 3,239  
 0.5 

Energy: Oil & Gas 
 4,024  
 0.7  
 2,676  
 0.4 

Forest Products & Paper 
 3,592  
 0.6  
 3,190  
 0.5 

Environmental Industries 
 3,120  
 0.5  
 2,155  
 0.4 

Energy: Electricity 
 2,855  
 0.5  
 2,105  
 0.3 

Utilities: Electric 
 2,234  
 0.4  
 2,353  
 0.4 

Total 
$607,550  
 100.0% 
$605,954  
 100.0%

 


85
 

 
Portfolio composition by geographic location at fair
value
 
The following table shows our portfolio composition by geographic
location at fair value at February 29, 2024 and February 28, 2023. The geographic composition is determined by the location of the corporate
headquarters of the portfolio company.
 


  
February 29, 2024  
February 28, 2023 

 
Investments at Fair
    Value  
Percentage
 of Total
 Portfolio  
Investments at Fair
    Value  
Percentage
 of Total
 Portfolio 

  
($ in thousands) 

Southeast 
$308,590  
 27.1% 
$247,192  
 25.4%

Midwest 
 264,966  
 23.3  
 199,944  
 20.6 

West 
 233,791  
 20.5  
 173,283  
 17.8 

Northeast 
 144,562  
 12.7  
 133,158  
 13.7 

Southwest 
 111,911  
 9.8  
 123,744  
 12.7 

Other(1) 
 74,974  
 6.6  
 92,760  
 9.5 

Northwest 
 -  
 -  
 2,509  
 0.3 

Total 
$1,138,794  
 100.0% 
$972,590  
 100.0%

 

 


(1)As of February 29, 2024, comprised of our investments in the subordinated
notes, F-2-R-3 Notes of Saratoga CLO, as well as the unsecured notes and equity interests in the SLF JV, and the Class E Note tranche
of the SLF 2022 and foreign investments. As of February 28, 2023, comprised of our investments in the subordinated notes, F-2-R-3 Notes
of Saratoga CLO, as well as the unsecured notes and equity interests in the SLF JV, and the Class E Note tranche of the SLF 2022 and foreign
investments.

 
Results of operations
 
Operating results for the fiscal years ended February 29,
2024, February 28, 2023 and February 28, 2022 were as follows:
 


  
For the Year Ended 

  
February 29,
 2024  
February 28,
 2023  
February 28,
 2022 

  
($ in thousands) 

Total investment income 
$143,720  
$99,104  
$70,740 

Total operating expenses 
 86,846  
 63,903  
 50,797 

Net investment income 
 56,874  
 35,201  
 19,943 

Net realized gains (losses) from investments 
 154  
 7,446  
 13,398 

Income tax (provision) benefit from realized gain on investments 
 -  
 549  
 (2,886)

Net change in unrealized appreciation (depreciation) on investments 
 (47,091) 
 (15,218) 
 17,020 

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments 
 (893) 
 (1,715) 
 695 

Loss on extinguishment of debt* 
 (110) 
 (1,587) 
 (2,434)

Net increase in net assets resulting from operations 
$8,934  
$24,676  
$45,735 

 

 


*Certain prior period amounts have been reclassified to conform
to current period presentation.

 


86
 

 
Investment income
 
The composition of our investment income for the fiscal years
ended February 29, 2024, February 28, 2023 and February 28, 2022 were as follows:
 


  
For the Year Ended 

  
February 29,
 2024  
February 28,
 2023  
February 28,
 2022 

  
($ in thousands) 

Interest from investments 
$127,785  
$85,217  
$58,502 

Interest from cash and cash equivalents 
 2,512  
 1,368  
 4 

Management fee income 
 3,270  
 3,270  
 3,263 

Incentive fee income 
 -  
 -  
 - 

Dividend Income* 
 6,533  
 2,720  
 1,926 

Structuring and advisory fee income 
 2,150  
 3,585  
 4,308 

Other income* 
 1,470  
 2,944  
 2,739 

Total investment income 
$143,720  
$99,104  
$70,740 

 

 


*Certain prior period amounts have been reclassified to conform
to current period presentation.

 
For the fiscal year ended February 29, 2024, total
investment income increased $44.6 million, or 45.0%, to $143.7 million for the fiscal year ended February 29, 2024 compared to $99.1 million
for the fiscal year ended February 28, 2023. Interest income from investments increased $42.6 million, or 50.0%, to $127.8 million for
the year ended February 29, 2024 from $85.2 million for the fiscal year ended February 28, 2023. The increase in interest income for the
fiscal year ended February 29, 2024 is primarily attributable to an increase of 17.1% in total investments to $1,138.8 million from $972.6
million in the prior period, as well as the increase in the weighted average current yield on investments of 11.4% compared to 10.7% in
the prior period.
 
For the fiscal year ended February 28, 2023, total
investment income increased $28.4 million, or 40.1%, to $99.1 million for the fiscal year ended February 28, 2023 compared to $13.1 million
for the fiscal year ended February 28, 2022. Interest income from investments increased $26.7 million, or 45.7%, to $85.2 million for
the year ended February 28, 2023 from $58.5 million for the fiscal year ended February 28, 2022. The increase in interest income for the
fiscal year ended February 28, 2023 is primarily attributable to an increase of 19.0% in total investments to $972.6 million from $817.6
million in the prior period, as well as the increase in the weighted average current yield on investments of 10.7% compared to 7.7% in
the prior period.
 
For the fiscal year ended February 29, 2024
and February 28, 2023, total PIK income was $2.5 million and $1.2 million, respectively. This increase was due to investment growth
and amended terms of debt securities that elected to pay a portion of their interest in PIK.
 
For the fiscal year ended February 28, 2023 and
February 28, 2022, total PIK income was $1.2 million and $1.5 million, respectively. This decrease was primarily due to the repayment
of debt securities that elected to pay a portion of their interest in PIK.
 
Management fee income reflects the fee income
received for managing the Saratoga CLO. For the years ended February 29, 2024, 2023 and 2022, total management fee income was $3.3 million,
$3.3 million and $3.3 million, respectively.
 
For the fiscal year ended February 29, 2024,
February 28, 2023 and February 28, 2022, total dividend income was $6.5 million, $2.7 million and $1.9 million, respectively.
Dividends received is recorded in the consolidated statements of operations when earned, and the increase primarily reflects $5.9
million of dividend income received on the SLF JV.
 
For the fiscal year ended February 29, 2024, February
28, 2023 and February 28, 2022, total structuring and advisory fee income was $2.1 million, $3.6 million and $4.3 million, respectively.
Structuring and advisory fee income represents fee income earned and received performing certain investment and advisory activities during
the closing of new investments, with the changes year-over-year primarily reflecting the increased or decreased originations during the
period.
 
For the fiscal year ended February 29, 2024, February
28, 2023 and February 28, 2022, other income was $1.5 million, $2.9 million and $2.7 million, respectively. Other income primarily includes
prepayment, amendment and redemption fees and is recorded in the consolidated statements of operations when earned.
 


87
 

 
Operating expenses
 
The composition of our operating expenses for the years ended
February 29, 2024, February 28, 2023 and February 28, 2022 were as follows:
 


  
For the Year Ended 

  
February 29,
 2024  
February 28,
 2023  
February 28,
 2022 

  
($ in thousands) 

Interest and debt financing expenses 
$49,180  
$33,499  
$19,880 

Base management fees 
 19,212  
 16,424  
 11,902 

Incentive management fees 
 8,025  
 5,057  
 11,794 

Professional fees 
 1,767  
 1,812  
 1,378 

Administrator expenses 
 3,873  
 3,160  
 2,906 

Insurance 
 322  
 347  
 349 

Directors fees and expenses 
 351  
 360  
 336 

General and administrative and other expenses 
 2,243  
 2,329  
 1,662 

Income tax expense (benefit) 
 43  
 (153) 
 (40)

Excise tax expense (benefit) 
 1,830  
 1,068  
 630 

Total operating expenses 
$86,846  
$63,903  
$50,797 

 
For the year ended February 29, 2024, total operating
expenses increased $22.9 million, or 35.9%, to $86.8 million compared to $63.9 million for the year ended February 28, 2023. For the year
ended February 28, 2023, total operating expenses increased $13.1 million, or 25.8%, to $63.9 compared to $50.8 million for the year ended
February 28, 2022.
 
For the year ended February 29, 2024, interest
and debt financing expenses increased $15.7 million, or 46.8% compared to the year ended February 28, 2023. The increase is attributable
to both the total average outstanding debt increasing from $663.0 million for the year ended February 28, 2023 to $798.9 million for the
year ended February 29, 2024, as well as the weighted average interest rate on our outstanding indebtedness increasing from 4.48% to 5.46%
for the same periods. The increase in total average outstanding debt and the weighted average interest rate was primarily due to the issuance
during the year ended February 29, 2024 of the higher-cost 8.75% 2025 Notes and 8.50% 2028 Notes. At February 29, 2024 and February 28,
2023, the lower-cost SBA debentures represented 26.1% and 27.7% of overall debt, respectively. 
 
For the year ended February 28, 2023, interest
and debt financing expenses increased $13.6 million, or 68.5% compared to the year ended February 28, 2022. The increase is attributable
to both the total average outstanding debt increasing from $417.4 million for the year ended February 28, 2022 to $663.0 million for the
year ended February 28, 2023, as well as the weighted average interest rate on our outstanding indebtedness increasing from 4.15% to 4.48%
for the same periods. The increase in total average outstanding debt and the weighted average interest rate was primarily due to the issuance
during the year ended February 28, 2023 of the higher-cost 6.00% 2027 Notes, 7.00% 2025 Notes, 8.00% 2027 Notes and 8.125% 2027 Notes.
At February 28, 2023 and February 28, 2022, the lower-cost SBA debentures represented 27.7% and 36.2% of overall
debt, respectively. 
 
For the year ended February 29, 2024, base management
fees increased $2.8 million, or 17.0% compared to the fiscal year ended February 28, 2023. The increase in base management fees is due
to the 17.0% increase in the average value of our total assets, less cash and cash equivalents, from $938.5 million as of February 28,
2023 to $1,097.8 million as of February 29, 2024.
 


88
 

 
For the year ended February 28, 2023, base management
fees increased $4.5 million, or 38.0% compared to the fiscal year ended February 28, 2022. The increase in base management fees is due
to the 38.0% increase in the average value of our total assets, less cash and cash equivalents, from $680.1 million as of February 28,
2022 to $938.5 million as of February 28, 2023.
 
For the year ended February 29, 2024, incentive
fees increased $3.0 million, or 58.7% compared to the fiscal year ended February 28, 2023. The incentive fee on income increased this
year from $6.8 million for the year ended February 28, 2023 to $13.0 million for the year ended February 29, 2024, reflecting the increased
operating performance of our debt investments during this period. The incentive fees on capital gains decreased from ($1.8) million benefit
for the fiscal year ended February 28, 2023 to ($8.3) million benefit for the fiscal year ended February 29, 2024, both reflecting the
incentive fee income and expense on net unrealized appreciation and depreciation recognized during both these periods.
 
For the year ended February 28, 2023, incentive
fees decreased $6.7 million, or 57.1% compared to the fiscal year ended February 28, 2022. The incentive fee on income increased this
year from $6.4 million for the year ended February 28, 2022 to $6.8 million for the year ended February 28, 2023, reflecting the increased
operating performance of our debt investments during this period. The incentive fees on capital gains decreased from $5.5 million expense
for the fiscal year ended February 28, 2022 to ($1.7) million benefit for the fiscal year ended February 28, 2023, both reflecting the
incentive fee income and expense on net unrealized appreciation and depreciation recognized during both these periods.
 
For the year ended February 29, 2024, professional
fees decreased $0.05 million, or 2.5% compared to the fiscal year ended February 28, 2023. This decrease primarily reflects the benefit of scale and optimization of costs and vendors across
accounting, legal and consulting fees across the Company.
 
For the year ended February 28, 2023, professional
fees increased $0.4 million, or 31.5% compared to the fiscal year ended February 28, 2022. This increase primarily reflects growth across
accounting, legal and consulting fees in connection with an increase in our assets and legal entities, as well as the increased rates
across vendors in the current inflation environment.
 
For the year ended February 29, 2024,
administrator expenses increased $0.7 million, or 22.5% compared to the fiscal year ended February 28, 2023, which reflects an
increase to the cap on the payment or reimbursement of expenses by the Company from $3.275 million last year to $ 4.3 million,
effective August 1, 2023.
 
For the year ended February 28, 2023, administrator
expenses increased $0.3 million, or 8.7% compared to the fiscal year ended February 28, 2022, which reflects an increase to the cap on
the payment or reimbursement of expenses by the Company from $3.0 million to 3.275 million, effective August 1, 2022.
  
For the fiscal years ended February 29, 2024,
February 28, 2023 and February 28, 2022, the average borrowings outstanding under the Credit Facilities was approximately $37.9 million,
$26.3 million and $8.7 million, respectively, and the average weighted average interest rate on the outstanding borrowing under the Credit
Facilities was 9.66%, 6.72% and 5.22%, respectively.
 
For the fiscal years ended February 29, 2024,
February 28, 2023 and February 28, 2022, the average borrowings outstanding of SBA debentures was $202.5 million, $230.0 million and $180.4
million, respectively. For the years ended February 29, 2024, February 28, 2023 and February 28, 2022, the weighted average interest rate
on the outstanding borrowings of the SBA debentures was 3.08%, 2.78% and 2.60%, respectively.
 
The weighted average dollar amount of our unsecured
notes for the fiscal years ended February 29, 2024 and February 28, 2023 were as follows:




  
Fiscal Year Ended 

(in millions) 
February 29,
 2024  
February 28,
 2023 

7.25% 2025 Notes 
$-  
$13.6 

7.75% 2025 Notes 
 5.0  
 5.0 

6.25% 2027 Notes 
 15.0  
 15.0 

4.375% 2026 Notes 
 175.0  
 175.0 

4.35% 2027 Notes 
 75.0  
 75.0 

6.00% 2027 Notes 
 105.5  
 88.2 

7.00% 2025 Notes 
 12.0  
 5.7 

8.00% 2027 Notes 
 46.0  
 15.6 

8.125% 2027 Notes 
 60.4  
 13.2 

8.75% 2025 Notes 
 17.5  
 - 

8.50% 2028 Notes 
 50.2  
 - 

 


89
 

 
For the years ended February 29, 2024, February
28, 2023 and February 28, 2022, we recognized income tax expense (benefit) of $0.04 million, ($0.15) million and ($0.04) million, respectively.
This relates to net deferred federal and state income tax expense (benefit) with respect to operating gains and losses and income derived
from equity investments held in entities that are treated as corporations for U.S. federal income tax purposes, as well as current U.S.
federal and state income taxes on those operating gains and losses when realized.
 
For the year ended February 29, 2024, we accrued
excise taxes of $1.8 million on undistributed taxable income as of December 31, 2023. For the year ended February 28, 2023, we accrued
excise taxes of $1.1 million on undistributed taxable income as of December 31, 2022.
 
Net realized gains (losses) on sales of investments
 
For the fiscal year ended February 29, 2024, we
had $30.3 million of sales, repayments, exits or restructurings resulting in $0.2 million
of net realized gains. The most significant realized gains and losses during the year ended February 29, 2024 were as follows (dollars
in thousands):
 
Fiscal year ended February 29, 2024
 


Issuer 
Asset Type 
Gross
 Proceeds  
Cost  
Net Realized Gain (Loss) 

PDDS Buyer, LLC 
Equity Interests 
$      -  
$     -  
$41,350 

Censis Technologies, Inc. 
Equity Interests 
 -  
 -  
 6,773 

GreyHeller LLC 
Equity Interests 
 -  
 -  
 42,568 

Ohio Medical, LLC 
Equity Interests 
 -  
 -  
 60,565 

Targus Holdings, Inc 
Equity Interests 
 -  
 -  
 2,327 

 
We received escrow payments from the prior sales
of our investments in PPDS Buyer, LLC, Censis Technologies, Inc., Ohio Medical, LLC, GreyHeller LLC and Targus Holdings, Inc.
 
For the fiscal year ended February 28, 2023, we
had $222.2 million of sales, repayments, exits or restructurings resulting in $7.4 million of net realized loss. The most significant
realized gains and losses during the year ended February 28, 2023 were as follows (dollars in thousands):
 
Fiscal year ended February 28, 2023
 


Issuer 
Asset Type 
Gross
 Proceeds  
Cost  
Net Realized Gain (Loss) 

PDDS Buyer, LLC 
Equity Interests 
$9,943,838  
$2,000,000  
$7,943,838 

Ohio Medical, LLC 
Equity Interests 
 770,161  
 380,353  
 389,808 

Targus Holdings, Inc. 
Equity Interests 
 540,075  
 1,589,630  
 (1,049,555)

Censis Technologies, Inc. 
Equity Interests 
 -  
 -  
 68,731 

Texas Teachers of Tomorrow, LLC 
Equity Interests 
 -  
 -  
 24,977 

V Rental Holdings LLC 
Equity Interests 
 -  
 -  
 68,800 

 
The $7.9 million of net realized gains was from
the sales of the equity position in our investment in PDDS Buyer, LLC.
 
The $0.4 million of net realized gains was from
the sales of the equity position in our investment in Ohio Medical, LLC.
 
The $1.0 million of net realized loss was from
the sales of the equity position in our investment in Targus Holding, Inc.
 


90
 

 
We received escrow payments from the prior sales
of our investments in Censis Technologies, Inc., Texas Teachers of Tomorrow, LLC and V Rental Holdings LLC. 
 
For the fiscal year ended February 28, 2022, we
had $226.9 million of sales, repayments, exits or restructurings resulting in $13.4 million of net realized loss. The most significant
realized gains and losses during the year ended February 28, 2022 were as follows (dollars in thousands):
 
Fiscal year ended February 28, 2022
 


Issuer 
Asset Type 
Gross
 Proceeds  
Cost  
Net Realized Gain 

GreyHeller LLC 
Equity Interests 
$8,178  
$850  
$7,328 

Lexipol, LLC 
Equity Interests 
 10,792  
 10,792  
 - 

My Alarm Center, LLC 
Equity Interests 
 -  
 4,867  
 (4,867)

Passageways, Inc. 
Equity Interests 
 7,440  
 1,000  
 6,476 

Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-1-R-3 Note 
Structured Finance Securities 
 8,360  
 8,500  
 (140)

Texas Teachers of Tomorrow, LLC 
Equity Interests 
 3,339  
 750  
 2,589 

V Rental Holdings LLC 
Equity Interests 
 2,345  
 366  
 1,979 

 
The $7.3 million of net realized gains was from
the sales of the equity position in our investment in GreyHeller LLC.
 
The $0.1 million of net realized loss was from
the sales of the equity position in our investment in Lexipol, LLC.
 
The $4.9 million of net realized loss was from
our investment in My Alarm Center, LLC that was deemed worthless during this period.
 
The $6.4 million of net realized gains was from
the sales of the equity position in our investment in Passageways Inc.
 
The $0.1 million of net realized loss was from
the repayment of the structured finance securities in the Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-1-R-3 Note.
 
The $2.6 million of net realized gains was from
the sales of the equity position in our investment in Texas Teachers of Tomorrow, LLC .
 
The $1.9 million of net realized gains was from
the sales of the equity position in our investment in V Rental Holdings LLC.
 


91
 

 
Net change in unrealized appreciation (depreciation) on investments
 
For the year ended February 29, 2024, our investments
had a net change in unrealized depreciation of $47.1 million compared to a net change in unrealized depreciation of $15.2 million for
the year ended February 28, 2023. The most significant cumulative changes in unrealized appreciation (depreciation) for the year ended
February 29, 2024, were the following (dollars in thousands):
 
Fiscal year ended February 29, 2024
 


Issuer 
Asset Type 
Cost  
Fair Value  
Total
 Unrealized
 Appreciation
 (Depreciation)  
YTD Change in Unrealized
 Appreciation
 (Depreciation) 

Pepper Palace, Inc. 
First Lien Term Loan & Equity Interests 
$35,438  
$2,489  
$(32,949) 
$(23,104)

Zollege PBC 
First Lien Term Loan & Equity Interests 
 17,949  
 3,784  
 (14,165) 
 (12,845)

Netreo Holdings, LLC 
First Lien Term Loan & Equity Interests 
 39,225  
 35,422  
 (3,803) 
 (12,083)

Saratoga Senior Loan Fund I JV, LLC 
Equity Interests 
 35,202  
 25,222  
 (9,980) 
 (5,504)

Saratoga Investment Corp. CLO 2013-1, Ltd. 
Structured Finance Securities 
 22,002  
 9,501  
 (12,501) 
 (4,734)

Knowland Group, LLC 
Second Lien Term Loan 
 15,879  
 12,643  
 (3,236) 
 2,882 

ETU Holdings, Inc. 
First Lien Term Loan, Second Lien Term Loan & Equity Interests 
 16,034  
 13,600  
 (2,434) 
 (2,518)

Vector Controls Holding Co., LLC 
First Lien Term Loan & Equity Interests 
 924  
 9,095  
 8,171  
 1,653 

Chronus LLC 
First Lien Term Loan & Equity Interests 
 22,875  
 22,069  
 (806) 
 (1,304)

Avionte Holdings, LLC 
Equity Interests 
 100  
 3,288  
 3,188  
 1,209 

Buildout, Inc. 
First Lien Term Loan, Second Lien Term Loan & Equity Interests 
 53,666  
 52,350  
 (1,316) 
 (1,167)

 
The $23.1 million net change in unrealized depreciation
in our investment in Pepper Palace, Inc. was driven by further declines in company performance during the year ended February 29, 2024.
 
The $12.8 million net change in unrealized depreciation
in our investment in Zollege PBC was driven by further declines in company performance during the year ended February 29, 2024.
 
The $12.1 million net change in unrealized depreciation
in our investment in Netreo Holdings, LLC was driven by increased company leverage and declines in company performance.
 
The $5.5 million net change in unrealized depreciation
in our investment in Saratoga Senior Loan Fund I JV, LLC was primarily driven by overall market conditions.
 
The $4.7 million net change in unrealized depreciation
in our investment in Saratoga Investment Corp. CLO 2013-1, Ltd. was driven by overall market conditions as well as the mark-down of specific investments.
 
The $2.9 million net change in unrealized appreciation
in our investment in Knowland Group, LLC was driven by overall improved company performance and valuation.
 
The $2.5 million net change in unrealized depreciation
in our investment in ETU Holdings, Inc. was driven by declining company performance.
 
The $1.7 million net change in unrealized appreciation
in our investment in Vector Controls Holding Co., LLC was driven by overall company performance.
 
The $1.3 million net change in unrealized depreciation
in our investment in Chronus LLC was driven by overall company performance.
 
The $1.2 million net change in unrealized appreciation
in our investment in Avionte Holdings, Inc. was driven by overall company performance.
 
The $1.2 million net change in unrealized depreciation
in our investment in Buildout, Inc. was driven by overall company performance.
 


92
 

 
For the year ended February 28, 2023, our investments
had a net change in unrealized depreciation of $15.2 million compared to a net change in unrealized appreciation of $17.0 million for
the year ended February 28, 2022. The most significant cumulative changes in unrealized appreciation (depreciation) for the year ended
February 28, 2023, were the following (dollars in thousands):
 
Fiscal year ended February 28, 2023
 


Issuer 
Asset Type 
Cost  
Fair Value  
Total
 Unrealized
 Appreciation
 (Depreciation)  
YTD Change in Unrealized
 Appreciation
 (Depreciation) 

Pepper Palace, Inc. 
First Lien Term Loan & Equity Interests 
$34,256  
$24,411  
$(9,845) 
$(9,327)

Artemis Wax Corp. 
First Lien Term Loan & Equity Interests 
 60,059  
 63,642  
 3,583  
 1,460 

Vector Controls Holding Co., LLC 
First Lien Term Loan & Equity Interests 
 3,090  
 9,608  
 6,518  
 3,099 

Axero Holdings, LLC 
First Lien Term Loan & Equity Interests 
 10,551  
 13,052  
 2,500  
 1,952 

Destiny Solutions Inc. 
First Lien Term Loan & Equity Interests 
 3,969  
 8,941  
 4,972  
 1,309 

Zollege PBC 
First Lien Term Loan & Equity Interests 
 16,652  
 15,333  
 (1,319) 
 (1,185)

Netreo Holdings, LLC 
First Lien Term Loan & Equity Interests 
 35,887  
 44,167  
 8,280  
 (2,363)

PDDS Buyer, LLC 
First Lien Term Loan & Equity Interests 
 -  
 -  
 -  
 (5,094)

Saratoga Investment Corp. CLO 2013-1, Ltd. 
Structured Finance Securities 
 28,944  
 21,177  
 (7,767) 
 (4,149)

Saratoga Senior Loan Fund I JV, LLC 
Equity Interests 
 35,202  
 30,726  
 (4,476) 
 (3,368)

 
The $9.3 million net change in unrealized depreciation in our investment in Pepper Palace,
Inc. was driven by overall company performance.
 
The $2.1 million net change in unrealized appreciation
in our investment in Artemis Wax Corp. was driven by improved financial performance.
 
The $3.1 million net change in unrealized appreciation
in our investment in Vector Controls Holding Co., LLC was driven by improved financial performance.
 
The $2.0 million net change in unrealized appreciation
in our investment in Axero Holdings, LLC was driven by growth and overall strong financial performance.
 
The $1.3 million net change in unrealized appreciation
in our investment in Destiny Solutions Inc. was driven by growth and overall strong financial performance.
 
The $1.2 million net change in unrealized depreciation
in our investment in Zollege PBC was driven by weakened financial performance.
 


93
 

 
 
The $2.4 million net change in unrealized depreciation
in our investment in Netreo Holdings, LLC was driven by increased leverage and slowing top line growth.
 
The $5.1 million net change in unrealized depreciation
in our investment in PDDS Buyer, LLC was driven by the sale of that investment, resulting in a reversal of previously recognized unrealized
appreciation reclassified to realized gains.
 
The $4.1 million net change in unrealized depreciation
in our investment in Saratoga Investment Corp. CLO 2013-1 Ltd. was driven by the increase in discount rates and overall market conditions.
 
The $3.4 million net change in unrealized depreciation
in our investment in Saratoga Senior Loan Fund I JV, LLC was driven by the increase in discount rates and overall market conditions. 
 
For the year ended February 28, 2022, our investments
had a net change in unrealized appreciation of $17.0 million compared to a net change in unrealized appreciation of $5.0 million for the
year ended February 28, 2021. The most significant cumulative changes in unrealized appreciation (depreciation) for the year ended February
28, 2022, were the following (dollars in thousands):
 
Fiscal year ended February 28, 2022
 


Issuer 
Asset Type 
Cost  
Fair Value  
Total
 Unrealized
 Appreciation
 (Depreciation)  
YTD Change in Unrealized
 Appreciation
 (Depreciation) 

ArbiterSports, LLC 
First Term Lien Loan 
$26,846  
$26,654  
$(192) 
$1,140 

Artemis Wax 
First Term Lien Loan & Equity Interests 
 36,774  
 38,234  
 1,460  
 1,460 

C2 Educational Systems 
First Term Lien Loan & Equity Interests 
 18,985  
 18,820  
 (165) 
 2,334 

Destiny Solutions Inc. 
First Term Lien Loan & Equity Interests 
 3,969  
 7,632  
 3,663  
 2,636 

GreyHeller LLC 
First Term Lien Loan & Equity Interests 
 1,636  
 1,636  
 -  
 (3,103)

My Alarm Center, LLC 
Equity Interests 
 -  
 -  
 -  
 4,686 

Netreo Holdings, LLC 
First Term Lien Loan & Equity Interests 
 27,160  
 37,804  
 10,644  
 5,056 

Passageways, Inc. 
First Term Lien Loan & Equity Interests 
 -  
 -  
 -  
 (2,311)

PDDS 
First Term Lien Loan & Equity Interests 
 29,944  
 35,038  
 5,094  
 4,270 

Saratoga Investment Corp. CLO 2013-1, Ltd. 
Structured Finance Securities 
 41,648  
 38,030  
 (3,618) 
 (1,675)

Saratoga Senior Loan Fund I JV, LLC 
Unsecrued & Equity Interest 
 26,250  
 25,141  
 (1,109) 
 (1,109)

SCHOOX INVESTMENTS LLC 
Equity Interests 
 476  
 3,306  
 2,830  
 2,830 

TG Pressure Washing Holdings 
First Term Lien Loan & Equity Interests 
 488  
 482  
 (6) 
 1,060 

Village Realty Holdings LLC 
First Term Lien Loan & Equity Interests 
 -  
 -  
 -  
 (2,183)

Vector Controls 
First Term Lien Loan & Equity Interests 
 5,008  
 8,427  
 3,419  
 1,393 

 


94
 

 
The $1.1 million net change in unrealized appreciation
in our investment in ArbiterSports, LLC was driven by improved financial performance.
 
The $1.5 million net change in unrealized appreciation
in our investment in Artemis Wax was driven by improved financial performance.
 
The $2.3 million net change in unrealized appreciation
in our investment in C2 Education Systems was driven by improved financial performance.
  
The $2.6 million net change in unrealized appreciation
in our investment in Destiny Solutions Inc. was driven by growth and overall strong financial performance.
 
The $3.1 million net change in unrealized depreciation
in our investment in GreyHeller LLC. was driven by the sale of that investment, resulting in a reversal of previously recognized unrealized
appreciation reclassified to realized gains.
 
The $4.7 million net change in unrealized appreciation
in our investment in My Alarm Center, LLC was driven by the reversal of previously recognized unrealized depreciation reclassified to
realized losses.
 
The $5.1 million net change in unrealized appreciation
in our investment in Netreo Holdings, LLC was driven by growth and improved financial performance.
 
The $2.3 million net change in unrealized depreciation
in our investment in Passageways, Inc. was driven by the sale of that investment, resulting in a reversal of previously recognized unrealized
appreciation reclassified to realized gains.
 
The $4.3 million net change in unrealized appreciation
in our investment in PDDS Buyer, LLC was driven by overall strong company performance.
 
The $1.7 million net change in unrealized depreciation
in our investment in Saratoga Investment Corp. CLO 2013-1 Ltd. was driven by the increase in discount rates, impact of LIBOR changes and
overall market conditions. 
 
The $1.1 million net change in unrealized depreciation
in our investment in Saratoga Senior Loan Fund I JV, LLC was driven by market volatility of the underlying investments of the fund.
 
The $2.8 million net change in unrealized appreciation
in our investment in Schoox, Inc. was driven by overall strong company performance.
 
The $1.1 million net change in unrealized appreciation
in our investment in Top Gun Pressure Washing, LLC was driven by growth, improved financial performance, and a reduced leverage profile.
 
The $2.2 million net change in unrealized depreciation
in our investment in Village Realty Holdings, LLC was driven by the sale of that investment, resulting in a reversal of previously recognized
unrealized appreciation reclassified to realized gains.
 
The $1.4 million net change in unrealized appreciation
in our investment in Vector Controls. was driven by growth and overall strong financial performance.
 


95
 

 
Changes in net assets resulting from operations
 
For the fiscal years ended February 29, 2024, February 28, 2023 and
February 28, 2022, we recorded a net increase in net assets resulting from operations of $8.9 million, $24.7 million and $45.7 million,
respectively. Based on 12,670,939 weighted average common shares outstanding as of February 29, 2024, our per share net increase in net
assets resulting from operations was $0.71 for the fiscal year ended February 29, 2024. This compares to a per share net increase in net
assets resulting from operations of $2.06 for the fiscal year ended February 28, 2023 (based on 11,963,533 weighted average common shares
outstanding as of February 28, 2023), and a per share net increase in net assets resulting from operations of $3.99 for the fiscal year
ended February 28, 2022 (based on 11,456,631 weighted average common shares outstanding as of February 28, 2022).
 
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
 
We intend to continue to generate cash primarily
from cash flows from operations, including interest earned from our investments in debt in middle-market companies, interest earned from
the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less,
the Encina Credit Facility and the Live Oak Credit Facility, our continued access to the SBA debentures future borrowings and future offerings
of debt and equity securities.
 
Although we expect to fund the growth of our investment
portfolio through the net proceeds from future equity offerings, including our dividend reinvestment plan (“DRIP”), our equity
ATM program, and issuances of senior securities or future borrowings, to the extent permitted by the 1940 Act, we cannot assure you that
our plans to raise capital will be successful. In this regard, because our common stock has historically traded at a price below our current
NAV per share and we are limited in our ability to sell our common stock at a price below NAV per share, we have been and may continue
to be limited in our ability to raise equity capital.
 
In addition, we intend to distribute to our stockholders
substantially all of our operating taxable income in order to satisfy the distribution requirement applicable to RICs under the Code.
In satisfying this distribution requirement, in accordance with certain applicable provisions of the Code and the Treasury regulations
and a revenue procedure issued by the Internal Revenue Service (“IRS”), a RIC may treat a distribution of its own stock as
fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or
stock of the RIC subject to a limitation that the aggregate amount of cash to be distributed to all stockholders must be at least 20%
of the aggregate declared distribution. We may rely on the revenue procedure in future periods to satisfy our RIC distribution requirement.
 
Also, as a BDC, we generally are required to meet
a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, to total senior securities,
which include all of our borrowings and any outstanding preferred stock, of at least 200%, reduced to 150% effective April 16, 2019 following
the approval received from our board of directors, including a majority of our independent directors, on April 16, 2018. This requirement
limits the amount that we may borrow. Our asset coverage ratio, as defined in the 1940 Act, was 161.1% as of February 29, 2024 and 165.9%
as of February 28, 2023. To fund growth in our investment portfolio in the future, we anticipate needing to raise additional capital from
various sources, including the equity markets and other debt-related markets, which may or may not be available on favorable terms, if
at all.
 
Consequently, we may not have the funds or the
ability to fund new investments, to make additional investments in our portfolio companies, to fund our unfunded commitments to portfolio
companies, to pay dividends or to repay borrowings. Also, the illiquidity of our portfolio investments may make it difficult for us to
sell these investments when desired and, if we are required to sell these investments, we may realize significantly less than their recorded
value.
 
Due to the diverse capital sources available to
us at this time, we believe we have adequate liquidity to support our near term capital requirements.
 


96
 

 
Encina Credit Facility
 
Below is a summary of the terms of the senior
secured revolving credit facility we entered into with Encina Lender Finance, LLC on October 4, 2021 (the “Encina Credit Facility”).
 
Commitment. We entered into the Credit
and Security Agreement (the “Encina Credit Agreement”) relating to the Encina Credit Facility in the initial facility amount
of $50.0 million (the “Facility Amount”). 
 
Availability. We can draw up to the lesser
of (i) the Facility Amount and (ii) the Borrowing Base. The Borrowing Base is an amount equal to (i) the difference of (A) the product
of the applicable advance rate which varies from 50.0% to 75.0% depending on the type of loan asset (Defaulted Loans being excluded in
that they carry an advance rate of 0%) and the value, determined in accordance with the Encina Credit Facility (the “Adjusted Borrowing
Value”), of certain “eligible” loan assets pledged as security for the loan (the “Borrowing Base Value”)
and (B) the Excess Concentration Amount, as calculated in accordance with the Encina Credit Facility, plus (ii) any amounts held in the
Prefunding Account and, without duplication, Excess Cash held in the Collection Account, less (iii) the product of (a) the amount of any
undrawn funding commitments we have under any loan asset and (b) the Unfunded Exposure Haircut Percentage, and less (iv) $100,000. Each
loan asset we held as of the date on which the Encina Credit Facility was closed was valued as of that date and each loan asset that we
acquires after such date will be valued at the lowest of its fair value, its face value (excluding accrued interest) and the purchase
price paid for such loan asset. Adjustments to the value of a loan asset will be made to reflect, among other things and under certain
circumstances, changes in its fair value, a default by the obligor on the loan asset, insolvency of the obligor, acceleration of the loan
asset, and certain modifications to the terms of the loan asset.
 
The Encina Credit Facility contains limitations
on the type of loan assets that are “eligible” to be included in the Borrowing Base and as to the concentration level of certain
categories of loan assets in the Borrowing Base such as restrictions on geographic and industry concentrations, asset size and quality,
payment frequency, status and terms, average life, and collateral interests. In addition, if an asset is to remain an “eligible”
loan asset, we may not make changes to the payment, amortization, collateral and certain other terms of the loan assets without the consent
of the administrative agent that will either result in subordination of the loan asset or be materially adverse to the lenders.
 
The Encina Credit Facility requires certain minimum
drawn amounts. For the period beginning on the closing date and ended April 4, 2022, the minimum funding amount was $12.5 million. For
the period beginning on April 5, 2022 through maturity, the minimum funding amount is the greater of $25.0 million and 50% of the Facility
Amount in effect from time to time.
 
Collateral. The Encina Credit Facility
is secured by assets of Saratoga Investment Funding II LLC (“SIF II”) and pledged to the lender under the credit facility.
SIF II is a wholly owned special purpose entity formed for the purpose of entering into the Encina Credit Facility.
 
Interest Rate and Fees. Under the Encina
Credit Facility, funds were borrowed from or through certain lenders at the greater of the prevailing LIBOR rate and 0.75%, plus an applicable
margin of 4.00%. The Encina Credit Agreement includes benchmark replacement provisions which permit the Administrative Agent and the
borrower to select a replacement rate upon the unavailability of LIBOR. In addition, we pay the lenders a commitment fee of 0.75% per
year (or 0.50% if the ratio of advances outstanding to aggregate commitments is greater than or equal to 50%) on the unused amount of
the Encina Credit Facility for the duration of the term of the Encina Credit Facility. Accrued interest and commitment fees are payable
monthly in arrears. We were also obligated to pay certain other fees to the lenders in connection with the closing of the Encina Credit
Facility.
 
Collateral Tests. It is a condition precedent
to any borrowing under the Encina Credit Facility that the principal amount outstanding under the Encina Credit Facility, after giving
effect to the proposed borrowings, not exceed the Borrowing Base (the “Borrowing Base Test”). In addition to satisfying the
Borrowing Base Test, the following tests must also be satisfied (together with Borrowing Base Test, the “Collateral Tests”):
 


 
o
Interest Coverage Ratio. The ratio (expressed as a percentage) of interest collections with respect to pledged loan assets, less certain fees and expenses relating to the Encina Credit Facility, to accrued interest and commitment fees payable to the lenders under the Encina Credit Facility for the last 6 payment periods must equal at least 175.0%.

 


 
o
Overcollateralization Ratio. The ratio (expressed as a percentage) of the aggregate Adjusted Borrowing Value of “eligible” pledged loan assets plus the fair value of certain ineligible pledged loan assets (in each case, subject to certain adjustments) to outstanding borrowings under the Encina Credit Facility plus the Unfunded Exposure Amount must equal at least 200.0%.

 


97
 

 
The Encina Credit Facility also may require payment
of outstanding borrowings or replacement of pledged loan assets upon our breach of our representation and warranty that pledged loan assets
included in the Borrowing Base are “eligible” loan assets. Such ineligible collateral loans will be excluded from the calculation
of the Borrowing Base and may lead to a Borrowing Base Deficiency, which may be cured by effecting one or more (or any combination thereof)
of the following actions: (A) deposit into or credit to the collection account cash and eligible investments, (B) repay outstanding borrowings
(together with certain costs and expenses), (C) sell or substitute loan assets in accordance with the Encina Credit Facility, or (D) pledge
additional loan assets as collateral. Compliance with the Collateral Tests is also a condition to the discretionary sale of pledged loan
assets by us.
 
Priority of Payments. The priority of payments
provisions of the Encina Credit Facility require, after payment of specified fees and expenses, that collections of interest from the
loan assets and, to the extent that these are insufficient, collections of principal from the loan assets, be applied on each payment
date to payment of outstanding borrowings if the Borrowing Base Test, the Overcollateralization Ratio and the Interest Coverage Ratio
would not otherwise be met.
 
Operating Expenses. The priority of payments
provision of the Encina Credit Facility provides for the payment of certain of our operating expenses out of collections on interest and
principal in accordance with the priority established in such provision. The operating expenses payable pursuant to the priority of payment
provisions is limited to $200,000 per annum.
  
Covenants; Representations and Warranties;
Events of Default. The Encina Credit Agreement contains customary representations and warranties, affirmative covenants, negative
covenants and events of default. The Encina Credit Agreement does not contain grace periods for breach by us of any negative covenants
or of certain of the affirmative covenants, including, without limitation, those related to preservation of the existence and separateness
of the Company. Other events of default under the Encina Credit Agreement include, among other things, the following:
 


 
o
our failure to maintain an Interest Coverage Ratio of less than 175%;

 


 
o
our failure to maintain an Overcollateralization Ratio of less than 200%;

 


 
o
the filing of certain ERISA or tax liens on our assets or the Equity holder;

 


 
o
failure by Specified Holders to collectively, directly or indirectly, own and control at least 51% of the outstanding equity interests of Saratoga Investment Advisor, or (y) possess the right to elect (through contract, ownership of voting securities or otherwise) at all times a majority of the board of directors (or similar governing body) of Saratoga Investment Advisor and to direct the management policies and decisions of Saratoga Investment Advisor, or (ii) the dissolution, termination or liquidation in whole or in part, transfer or other disposition, in each case, of all or substantially all of the assets of, Saratoga Investment Advisor;

 


 
o
indictment or conviction of Saratoga Investment Advisors or any “key person” for a felony offense, or any fraud, embezzlement or misappropriation of funds by Saratoga Investment Advisors or any “key person” and, in the case of “key persons,” without a reputable, experienced individual reasonably satisfactory to Encina Lender Finance appointed to replace such key person within 30 days;

 


 
o
resignation, termination, disability or death of a “key person” or failure of any “key person” to provide active participation in Saratoga Investment Advisors’ daily activities, all without a reputable, experienced individual reasonably satisfactory to Encina Lender Finance appointed within 30 days.

 


98
 

 
Fees and Expenses. We paid certain fees
and reimbursed Encina Lender Finance, LLC for the aggregate amount of all documented, out-of-pocket costs and expenses, including the
reasonable fees and expenses of lawyers, incurred by Encina Lender Finance, LLC in connection with the Encina Credit Facility and the
carrying out of any and all acts contemplated thereunder up to and as of the date of closing. These amounts totaled $1.4 million.
 
On January 27, 2023, we entered into the first amendment to the Encina
Credit Agreement to, among other things:
 


 
●
increase the borrowings available under the Encina Credit Facility from up to $50.0 million to up to $65.0 million;

 


 
●
change the underlying benchmark used to compute interest under the
Encina Credit Agreement from LIBOR to Term SOFR for a one-month tenor plus a 0.10% credit spread adjustment;

 


 
●
increase the applicable effective margin rate on borrowings from 4.00% to 4.25%;

 


 
●
extend the revolving period from October 4, 2024 to January 27, 2026;

 


 
●
extend the period during which the borrower may request one or more increases in the borrowings available under the Encina Credit Facility (each such increase, a “Facility Increase”) from October 4, 2023 to January 27, 2025, and increased the maximum borrowings available pursuant to the Encina Facility Increase from $75.0 million to $150.0 million;

 


 
●
revised the eligibility criteria for eligible collateral loans to exclude certain industries in which an obligor or related guarantor may be involved; and

 


 
●
amended the provisions permitting the borrower to request an extension
in the Commitment Termination Date (as defined in the Encina Credit Agreement) to allow requests to extend any applicable Commitment Termination
Date, rather than a one-time request to extend the original Commitment Termination Date, subject to a notice requirement.

  
As of February 29, 2024, we had $35.0 million
outstanding borrowings under the Credit Facility and $214.0 million of SBA-guaranteed debentures outstanding (which are discussed below).
As of February 28, 2023, we had $32.5 million outstanding borrowings under the Credit Facility and $202.0 million of SBA-guaranteed debentures
outstanding. Our borrowing base under the Credit Facility at February 29, 2024 and February 28, 2023 was $65.0 million and $65.0 million,
respectively.
 
Our asset coverage ratio, as defined in the 1940
Act, was 161.1% as of February 29, 2024 and 165.9% as of February 28, 2023.
 
SBA-guaranteed debentures
 
In addition, we, through three wholly owned subsidiaries,
sought and obtained licenses from the SBA to operate an SBIC. In this regard, our wholly owned subsidiaries, SBIC LP, SBIC II LP, and
SBIC III LP, received an SBIC license from the SBA on March 28, 2012, August 14, 2019, and September 29, 2022, respectively. SBICs are
designated to stimulate the flow of private equity capital to eligible small businesses. Under SBA regulations, SBICs may make loans to
eligible small businesses and invest in the equity securities of small businesses. Following the debentures being fully repaid to the
SBA, SBIC LP surrendered its license on January 3, 2023, and SBIC LP subsequently merged with and into the Company.
 
The SBIC license allows our SBIC Subsidiaries
to obtain leverage by issuing SBA-guaranteed debentures. SBA-guaranteed debentures are non-recourse, interest only debentures with interest
payable semi-annually and have a ten-year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior
to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteed debentures is fixed on a semi-annual basis
at a market-driven spread over U.S. Treasury Notes with 10-year maturities.
 


99
 

 
The SBIC Subsidiaries are regulated by the SBA.
SBA regulations currently limit the amount that our SBIC Subsidiaries may borrow to a maximum of $175.0 million of SBA debentures when
it has at least $87.5 million in regulatory capital, subject to the SBA’s approval. Under current SBIC regulations, for two or more
SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million. Our wholly owned SBIC Subsidiaries
are able to borrow funds from the SBA against regulatory capital (which generally approximates equity capital in the respective SBIC)
and is subject to customary regulatory requirements, including, but not limited to, periodic examination by the SBA.
 
We received exemptive relief from the SEC to permit
us to exclude the debt of our SBIC Subsidiaries guaranteed by the SBA from the definition of senior securities in the asset coverage test
under the 1940 Act. This allows us increased flexibility under the asset coverage test by permitting us to borrow up to $350.0 million
more than we would otherwise be able to absent the receipt of this exemptive relief. On April 16, 2018, as permitted by the Small Business
Credit Availability Act, which was signed into law on March 23, 2018, our board of directors, including a majority of our independent
directors, approved of our becoming subject to a minimum asset coverage ratio of 150% from 200% under Sections 18(a)(1) and 18(a)(2) of
the Investment Company Act, as amended. The 150% asset coverage ratio became effective on April 16, 2019.
 
As of February 29, 2024, SBIC LP had $0.0 million
in regulatory capital and $0.0 million SBA-guaranteed debentures outstanding. SBIC II LP had $87.5 million in regulatory capital
and $175.0 million SBA-guaranteed debentures outstanding. SBIC III LP had $66.7 million in regulatory capital and $39.0 million
SBA-guaranteed debentures outstanding.
 
Unsecured notes
 
7.25% 2025 Notes
 
On June 24, 2020, we issued $37.5 million aggregate
principal amount of our 7.25% 2025 Notes for net proceeds of $36.3 million after deducting underwriting commissions of approximately $1.2
million. Offering costs incurred were approximately $0.3 million. On July 6, 2020, the underwriters exercised their option in full to
purchase an additional $5.625 million in aggregate principal amount of its 7.25% 2025 Notes. Net proceeds to the Company were $5.4 million
after deducting underwriting commissions of approximately $0.2 million. The net proceeds from the offering were used for general corporate
purposes in accordance with our investment objective and strategies. Financing costs of $1.6 million related to the 7.25% 2025 Notes have
been capitalized and were amortized over the term of the 7.25% 2025 Notes.
 
On July 14, 2022, we redeemed $43.1 million in
aggregate principal amount of the issued and outstanding 7.25% 2025 Notes. The 7.25% 2025 Notes were listed on the NYSE under the trading
symbol of “SAK” and have been delisted following the full redemption on July 14, 2022.
 
At February 29, 2024, the total 7.25% 2025 Notes
outstanding was $0.0 million.
 
7.75% 2025 Notes
 
On July 9, 2020, we issued $5.0 million aggregate
principal amount of our 7.75% fixed-rate notes due in 2025 (the “7.75% 2025 Notes”) for net proceeds of $4.8 million after
deducting underwriting commissions of approximately $0.2 million. Offering costs incurred were approximately $0.1 million. Interest on
the 7.75% 2025 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 7.75% per year. The
7.75% 2025 Notes mature on July 9, 2025 and may be redeemed in whole or in part at any time or from time to time at our option, subject
to a fee depending on the date of repayment. The net proceeds from the offering were used for general corporate purposes in accordance
with our investment objective and strategies. Financing costs of $0.3 million related to the 7.75% 2025 Notes have been capitalized and
are being amortized over the term of the Notes. The 7.75% 2025 Notes are not listed and have a par value of $25.00 per note.
 
At February 29, 2024, the total 7.75% 2025 Notes
outstanding was $5.0 million.
 


100
 

 
6.25% 2027 Notes
 
On December 29, 2020, we issued $5.0 million in
aggregate principal amount of our 6.25% fixed-rate notes due in 2027 (the “6.25% 2027 Notes”).  Offering costs incurred
were approximately $0.1 million.  Interest on the 6.25% 2027 Notes is paid quarterly in arrears on February 28, May 31,
August 31 and November 30, at a rate of 6.25% per year. The 6.25% 2027 Notes mature on December 29, 2027 and may be redeemed
in whole or in part at any time or from time to time at our option, on or after December 29, 2024. The net proceeds from the offering
were used for general corporate purposes in accordance with our investment objective and strategies. Financing costs of $0.1 million
related to the 6.25% 2027 Notes have been capitalized and are being amortized over the term of the Notes.
 
On January 28, 2021, we issued an additional $10.0
million in aggregate principal amount of the 6.25% 2027 Notes for net proceeds of $9.7 million after deducting underwriting commissions
of approximately $0.3 million (the “Additional 6.25% 2027 Notes”). The Additional 6.25% 2027 Notes are treated as a single
series with the existing 6.25% 2027 Notes under the indenture and have the same terms as the existing 6.25% 2027 Notes. Offering costs
incurred were approximately $0.1 million. Interest on the 6.25% 2027 Notes is paid quarterly in arrears on February 28, May 31, August
31 and November 30, at a rate of 6.25% per year. The 6.25% 2027 Notes mature on January 28, 2027 and commencing January 28, 2023, may
be redeemed in whole or in part at any time or from time to time at our option on or after December 29, 2024. The net proceeds from the
offering were used for general corporate purposes in accordance with our investment objective and strategies. Financing costs of $0.4
million related to the 6.25% 2027 Notes have been capitalized and are being amortized over the term of the 6.25% 2027 Notes. The 6.25%
2027 Notes are not listed and have a par value of $25.00 per note.
 
At February 29, 2024, the total 6.25% 2025 Notes
outstanding was $15.0 million.
 
4.375% 2026 Notes
 
On March 10, 2021, we issued $50.0 million in
aggregate principal amount of the 4.375% fixed rate notes due 2026 (the “4.375% 2026 Notes”) for net proceeds of $49.0 million
after deducting underwriting commissions of approximately $1.0 million. Offering costs incurred were approximately $0.3 million. 
Interest on the 4.375% 2026 Notes is paid semi-annually in arrears on February 28 and August 28, at a rate of 4.375% per year. The
4.375% 2026 Notes mature on February 28, 2026 and may be redeemed in whole or in part at any time on or after November 28, 2025 at par
plus a “make-whole” premium, and thereafter at par. The net proceeds from the offering were used for general corporate purposes
in accordance with our investment objective and strategies. Financing costs of $1.2 million related to the 4.375% 2026 Notes have
been capitalized and are being amortized over the term of the 4.375% 2026 Notes.
 
On July 15, 2021, we issued an additional $125.0
million in aggregate principal amount of the 4.375% 2026 Notes (the “Additional 4.375% 2026 Notes”) for net proceeds for approximately
$123.5 million, based on the public offering price of 101.00% of the aggregate principal amount of the Additional 4.375% 2026 Notes, after
deducting the underwriting discount of $2.5 million and the offering expenses of approximately $0.2 million payable by the Company. The
net proceeds from the offering were used to redeem all of the outstanding 6.25% 2025 Notes (as described above), and for general corporate
purposes in accordance with our investment objective and strategies. The Additional 4.375% 2026 Notes are treated as a single series with
the existing 4.375% 2026 Notes under the indenture and have the same terms as the existing 4.375% 2026 Notes.
 
At February 29, 2024 the total 4.375% Notes outstanding
was $175.0 million.
 
4.35% 2027 Notes
 
On January 19, 2022, we
issued $75.0 million in aggregate principal amount of our 4.35% fixed-rate Notes due in 2027 (the “4.35% 2027 Notes”)
for net proceeds of $73.0 million, based on the public offering price of 99.317% of the aggregate principal amount of the 4.35% 2027 Notes,
after deducting the underwriting commissions of approximately $1.5 million. Offering costs incurred
were approximately $0.3 million.  Interest on the 4.35% 2027 Notes is paid semi-annually in arrears on February 28 and
August 28, at a rate of 4.35% per year. The 4.35% 2027 Notes mature on February 28, 2027 and may be redeemed in whole or
in part at our option at any time prior to November 28, 2026, at par plus a “make-whole” premium, and thereafter at par.
The net proceeds from the offering were used for general corporate purposes in accordance with
our investment objective and strategies. Financing costs of $1.8 million related to the 4.35% 2027 Notes have been capitalized and
are being amortized over the term of the 4.35% 2027 Notes.
 
At February 29, 2024 the total 4.35% Notes outstanding
was $75.0 million.
 


101
 

 
6.00% 2027 Notes
 
On April 27, 2022, we issued $87.5 million in
aggregate principal amount of 6.00% fixed-rate notes due 2027 (the “6.00% 2027 Notes”) for net proceeds of $84.8 million after
deducting underwriting commissions of approximately $2.7 million. Offering costs incurred were approximately $0.1 million. On May 10,
2022, the underwriters partially exercised their option to purchase an additional $10.0 million in aggregate principal amount of the 6.00%
2027 Notes. Net proceeds were $9.7 million after deducting underwriting commissions of approximately $0.3 million. Interest on the 6.00%
2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 6.00% per year. The 6.00% 2027
Notes mature on April 30, 2027 and commencing April 27, 2024, may be redeemed in whole or in part at any time or from time to time at
our option. The net proceeds from the offering were used for general corporate purposes in accordance with our investment objective and
strategies. Financing costs of $3.3 million related to the 6.00% 2027 Notes have been capitalized and are being amortized over the term
of the 6.00% 2027 Notes. The 6.00% 2027 Notes are listed on the NYSE under the trading symbol “SAT” with a par value of $25.00
per note.
 
On August 15, 2022, we issued an additional $8.0
million in aggregate principal amount of the 6.00% 2027 Notes (the “Additional 6.00% 2027 Notes”) for net proceeds of $7.8
million, based on the public offering price of 97.80% of the aggregate principal amount of the 6.00% 2027 Notes. The Additional 6.00%
2027 Notes are treated as a single series with the existing 6.00% 2027 Notes under the indenture and have the same terms as the existing
6.00% 2027 Notes. The net proceeds from the offering were used for general corporate purposes in accordance with our investment objective
and strategies. Additional offering costs incurred were approximately $0.03 million. Additional financing costs of $0.03 million related
to the 6.00% 2027 Notes have been capitalized and are being amortized over the term of the 6.00% 2027 Notes.
 
At February 29, 2024 the total 6.00% 2027 Notes
outstanding was $105.5 million.
 
7.00% 2025 Notes
 
On September 8, 2022, we issued $12.0 million
in aggregate principal amount of 7.00% fixed-rate notes due 2025 (the “7.00% 2025 Notes”) for net proceeds of $11.6 million
after deducting customary fees and offering expenses of approximately $0.4 million. Interest on the 7.00% 2025 Notes is paid quarterly
in arrears on February 28, May 31, August 31 and November 30, at a rate of 7.00% per year. The 7.00% 2025 Notes mature on September 8,
2025 and commencing September 8, 2024, may be redeemed in whole or in part at any time or from time to time at our option. The net proceeds
from the offering were used for general corporate purposes in accordance with our investment objective and strategies. Financing costs
of $0.05 million related to the 7.00% 2025 Notes have been capitalized and are being amortized over the term of the 7.00% 2025 Notes.
 
At February 29, 2024 the total 7.00% 2025 Notes
outstanding was $12.0 million.
 
8.00% 2027 Notes
 
On October 27, 2022, we issued $40.0 million in
aggregate principal amount of our 8.00% fixed-rate notes due 2027 (the “8.00% 2027 Notes”) for net proceeds of $38.7 million
after deducting underwriting commissions of approximately $1.3 million. Offering costs incurred were approximately $0.1 million. On November
10, 2022, the underwriters partially exercised their option to purchase an additional $6.0 million in aggregate principal amount of the
8.00% 2027 Notes. Net proceeds were $5.8 million after deducting underwriting commissions of approximately $0.2 million. Interest on the
8.00% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 8.00% per year. The 8.00%
2027 Notes mature on October 31, 2027 and commencing October 27, 2024, may be redeemed in whole or in part at any time or from time to
time at our option. The net proceeds from the offering were used for general corporate purposes in accordance with our investment objective
and strategies. Financing costs of $1.73 million related to the 8.00% 2027 Notes have been capitalized and are being amortized over the
term of the 8.00% 2027 Notes. The 8.00% 2027 Notes are listed on the NYSE under the trading symbol “SAJ” with a par value
of $25.00 per note.
 
 At February 29, 2024 the total 8.00% 2027
Notes outstanding was $46.0 million.
 


102
 

 
8.125% 2027 Notes
 
On December 13, 2022, we issued $52.5 million
in aggregate principal amount of 8.125% fixed-rate notes due 2027 (the “8.125% 2027 Notes”) for net proceeds of $50.8 million
after deducting underwriting commissions of approximately $1.6 million. Offering costs incurred were approximately $0.1 million. On December
21, 2022, the underwriters fully exercised their option to purchase an additional $7.875 million in aggregate principal amount of the
8.125% 2027 Notes. Net proceeds were $7.6 million after deducting underwriting commissions of approximately $0.2 million. Interest on
the 8.125% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 8.125% per year. The
8.125% 2027 Notes mature on December 31, 2027 and commencing December 13, 2024, may be redeemed in whole or in part at any time or from
time to time at our option. The net proceeds from this offering were used to make investments in middle-market companies (including investments
made through our SBIC subsidiaries) in accordance with our investment objective and strategies and for general corporate purposes. Financing
costs of $2.0 million related to the 8.125% 2027 Notes have been capitalized and are being amortized over the term of the 8.125% 2027
Notes. The 8.125% 2027 Notes are listed on the NYSE under the trading symbol “SAY” with a par value of $25.00 per note.
 
At February 29, 2024, the total 8.125% 2027 Notes
outstanding was $60.4 million.
 
8.75% 2025 Notes 
 
On March 31, 2023, we issued $10.0 million in
aggregate principal amount of 8.75% fixed-rate notes due 2024 (the “8.75% 2025 Notes”) for net proceeds of $9.7 million after
deducting underwriting discounts of approximately $0.4 million. On May 1, 2023, we issued an additional $10.0 million in aggregate principal
amount of the 8.75% 2024 Notes for net proceeds of $9.7 million after deducting underwriting discounts of approximately $0.4 million.
Offering costs incurred were approximately $0.03 million. Interest on the 8.75% 2025 Notes is paid quarterly in arrears on February 28,
May 31, August 31 and November 30, at a rate of 8.75% per year.  On February 2, 2024, pursuant to the terms of the indenture governing
the 8.75% 2025 Notes, we elected to exercise our option to extend the maturity date of the 8.75% 2025 Notes from March 31, 2024 to March
31, 2025. Net proceeds from this offering were used to make investments in middle-market companies (including investments made through
our SBIC Subsidiaries) in accordance with our investment objective and strategies and general corporate purposes. Financing costs and
discounts of $0.7 million related to the 8.75% 2025 Notes have been capitalized and are being amortized over the term of the 8.75% 2025
Notes.
 
At February 29, 2024, the total 8.75% 2025 Notes
outstanding was $20.0 million.
 
8.50% 2028 Notes
 
On April 14, 2023, we issued $50.0 million in
aggregate principal amount of 8.50% fixed-rate notes due 2028 (the “8.50% 2028 Notes”) for net proceeds of $48.4 million after
deducting underwriting commissions of approximately $1.6 million. Offering costs incurred were approximately $0.03 million. On April 26,
2023, the underwriters fully exercised their option to purchase an additional $7.5 million in aggregate principal amount of the 8.50%
2028 Notes. Net proceeds were $7.3 million after deducting underwriting commissions of approximately $0.2 million. Interest on the 8.50%
2028 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 8.50% per year.  The 8.50%
2028 Notes mature on April 15, 2028, and commencing April 14, 2025, may be redeemed in whole or in part at any time or from time to time
at our option. Net proceeds from this offering were used to repay a portion of the outstanding indebtedness under the Encina Credit Facility,
make investments in middle-market companies (including investments made through our SBIC Subsidiaries) in accordance with our investment
objective and strategies and for general corporate purposes. Financing costs of $2.0 million related to the 8.50% 2028 Notes have been
capitalized and are being amortized over the term of the 8.50% 2028 Notes. The 8.50% 2028 Notes are listed on the NYSE under the trading
symbol “SAZ” with a par value of $25.00 per note.
 
At February 29, 2024, the total 8.50% 2028 Notes
outstanding was $57.5 million.
 

At February 29, 2024 and February 28, 2023, the
fair value of total cash and cash equivalents, cash and cash equivalents in reserve accounts and total investments by major category are
as follows:
 


  
February 29, 2024   
February 28, 2023 

  
Fair Value  
Percentage
 of Total  
Fair Value  
Percentage
 of Total 

  
($ in thousands) 

Cash and cash equivalents 
$8,693  
 0.8% 
$65,746  
 6.2%

Cash and cash equivalents, reserve accounts 
 31,814  
 2.7  
 30,330  
 2.8 

First lien term loans 
 976,423  
 82.8  
 798,534  
 74.7 

Second lien term loans 
 18,097  
 1.5  
 14,936  
 1.4 

Structured finance securities 
 30,626  
 2.6  
 41,362  
 3.9 

Unsecured loan 
 15,818  
 1.3  
 20,661  
 1.9 

Equity interests 
 97,830  
 8.3  
 97,097  
 9.1 

Total 
$1,179,301  
 100.0% 
$1,068,666  
 100.0%

 


103
 

 
Equity Capital Activities
 
Share Repurchases
 
On September 24, 2014, we announced the approval
of the Share Repurchase Plan. Since September 24, 2014, the Share Repurchase Plan has been extended annually, and we have periodically
increased the amount of shares of common stock that may be purchased under the Share Repurchase Plan. Most recently, on January 9, 2023,
our board of directors extended the Share Repurchase Plan for another year to January 15, 2024, increasing the number of shares that may
be repurchased under the Share Repurchase Plan to 1.7 million shares of common stock. As of February 29, 2024, we purchased 1,035,203
shares of common stock, at the average price of $22.05 for approximately $22.8 million pursuant to the Share Repurchase Plan. During the
three months ended February 29, 2024 we did not purchased shares of common stock pursuant to the Share Repurchase Plan. During the year
ended February 29, 2024 we purchased 88,576 shares of common stock, at the average price $24.36 for approximately $2.2 million pursuant
to the Share Repurchase Plan.
 
Public Equity Offering
 
On July 13, 2018, we issued 1,150,000 shares of
its common stock priced at $25.00 per share (par value $0.001 per share) at an aggregate total of $28.75 million. The net proceeds, after deducting
underwriting commissions of $1.15 million and offering costs of approximately $0.2 million, amounted to approximately $27.4 million. We
also granted the underwriters a 30-day option to purchase up to an additional 172,500 shares of its common stock, which was not exercised.
 
Equity ATM Program
 
On March 16, 2017, we entered into an equity distribution
agreement with Ladenburg Thalmann & Co. Inc., through which we may offer for sale, from time to time, up to $30.0 million of our common
stock through an ATM offering. Subsequent to this, we amended our equity distribution agreement to add BB&T Capital Markets and B.
Riley FBR, Inc. as sales agents in our ATM offering. On July 11, 2019, the amount of the common stock to be offered was increased to $70.0
million, and on October 8, 2019, the amount of the common stock to be offered was increased to $130.0 million. This agreement was terminated
as of July 29, 2021, and as of that date, we had sold 3,922,018 shares for gross proceeds of $97.1 million at an average price of $24.77
for aggregate net proceeds of $95.9 million (net of transaction costs).
 
On July 30, 2021, we entered into an equity distribution
agreement (the “Equity Distribution Agreement”) with Ladenburg Thalmann & Co. Inc. and Compass Point Research and Trading,
LLC, each as agents (the “Agents”), through which we may offer for sale, from time to time, up to $150.0 million of our common
stock through the Agents, or to them, as principal for their account (the “ATM Program”).
 
On July 6, 2023, we amended the Equity Distribution
Agreement to increase the maximum amount of shares of our common stock to be sold through the ATM Program to $300.0 million from $150.0
million, and on July 19, 2023, we amended the Equity Distribution Agreement to add an additional distribution agent, Raymond James &
Associates. The sales price per share of our common stock offered under the ATM Program, less the Agents’ commission, will not be
less than the NAV per share of our common stock at the time of such sale. Consistent with the terms of the ATM Program, the Manager may,
from time to time and in its sole discretion, contribute proceeds necessary to ensure that no sales are made at a price below the then-current
NAV per share.
 
As of February 29, 2024 we sold 6,543,878 shares
for gross proceeds of $172.5 million at an average price of $26.37 for aggregate net proceeds of $171.0 million (net of transaction costs).
During the three months ended February 29, 2024, we sold 501,105 shares for gross proceeds of $14.3 million at an average price of $28.44
for aggregate net proceeds of $14.3 million (net of transaction costs). During the year ended February 29, 2024, we sold 1,703,517 shares
for gross proceeds of $49.0 million at an average price of $28.51 for aggregate net proceeds of $49.0 million (net of transaction costs).
The Manager agreed to reimburse the Company to the extent the per share price of the shares to the public, less underwriting fees, was
less than net asset value per share. For the three months ended February 29, 2024, the Manager reimbursed the Company $1.4 million. For
the year ended February 29, 2024, the Manager reimbursed the Company $4.5 million. 
 


104
 

 
Dividend Distributions 
 
We have distributed or intend to distribute sufficient
dividends to eliminate taxable income for our completed tax years. If we fail to satisfy the 90% distribution requirement or otherwise
fail to qualify as a RIC in any tax year, we would be subject to U.S. federal income tax in that year on all of our taxable income imposed
at corporate rates, regardless of whether we made any distributions to our shareholders. Shareholders have the option to receive payment
of the dividend in cash, or receive shares of common stock, pursuant to the DRIP. Our distributions for the tax years ended February 29,
2024 to inception were as follows:
 



Payment date 
Cash
Dividend   

Tax Year Ended February 28, 2025 
   

March 28, 2024 
$0.73(45) 

  
$0.73  

Tax Year Ended February 29, 2024 
    

December 28, 2023 
$0.72(44) 

September 28, 2023 
 0.71(43) 

June 29, 2023 
 0.70(42) 

March 30, 2023 
 0.69(1) 

  
$2.82  

Tax Year Ended February 28, 2023 
    

January 4, 2023 
$0.68(2) 

September 29, 2022 
 0.54(3) 

June 29, 2022 
 0.53(4) 

March 28, 2022 
 0.53(5) 

  
$2.28  

Tax Year Ended February 28, 2022 
    

January 19, 2022 
$0.53(6) 

September 28, 2021 
 0.52(7) 

June 29, 2021 
 0.44(8) 

April 22, 2021 
 0.43(9) 

  
$1.92  

Tax Year Ended February 28, 2021 
    

February 10, 2021 
$0.42(10) 

November 10, 2020 
 0.41(11) 

August 12, 2020 
 0.40(12) 

  
$1.03  

Tax Year Ended February 29, 2020 
    

February 6, 2020 
$0.56(13) 

September 26, 2019 
 0.56(14) 

June 27, 2019 
 0.55(15) 

March 28, 2019 
 0.54(16) 

  
$2.21  

Tax Year Ended February 28, 2019 
    

January 2, 2019 
$0.53(17) 

September 27, 2018 
 0.52(18) 

June 27, 2018 
 0.51(19) 

March 26, 2018 
 0.50(20) 

  
$2.06  

Tax Year Ended February 28, 2018 
    

December 27, 2017 
$0.49(21) 

September 26, 2017 
 0.48(22) 

June 27, 2017 
 0.47(23) 

March 28, 2017 
 0.46(24) 

  
$1.90  

Tax Year Ended February 28, 2017 
    

February 9, 2017 
$0.45(25) 

November 9, 2016 
 0.44(26) 

September 5, 2016 
 0.20(27) 

August 9, 2016 
 0.43(28) 

April 27, 2016 
 0.41(29) 

  
$1.93  

Tax Year Ended February 29, 2016 
    

February 29, 2016 
$0.40(30) 

November 30, 2015 
 0.36(31) 

August 31, 2015 
 0.33(32) 

June 5, 2015 
 1.00(33) 

May 29. 2015 
 0.27(34) 

  
$2.36  

Tax Year Ended February 28, 2015 
    

February 27, 2015 
$0.22(35) 

November 28, 2014 
 0.18(36) 

  
$0.40  

Tax Year Ended February 28. 2014 
    

December 27, 2013 
$2.65(37) 

  
$2.65  

Tax Year Ended February 28, 2013 
    

December 31, 2012 
$4.25(38) 

  
$4.25  

Tax Year Ended February 29, 2012 
    

December 30, 2011 
$3.00(39) 

  
$3.00  

Tax Year Ended February 28, 2011 
    

December 29, 2010 
$4.40(40) 

  
$4.40  

Tax Year Ended February 28, 2010 
    

December 31, 2009 
$18.25(41) 

  
$18.25  

 


105
 

 


(1) 
Based on shareholder elections, the dividend consisted of approximately $7.1 million in cash and 45,818 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.11 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on March 17, 20, 21, 22, 23, 24, 27, 28, 29, and 30, 2023. 

 


(2) 
Based on shareholder elections, the dividend consisted of approximately $6.8 million in cash and 53,615 newly issued shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $24.26 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on December 20, 21, 22, 23, 27, 28, 29 and 30 2022 and January 3 and 4, 2023.

 
 

(3) 
Based on shareholder elections, the dividend consisted of approximately $5.3 million in cash and 52,312 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.00 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on September 16, 19, 20, 21, 22, 23, 26, 27, 28 and 29, 2022.

 
 

(4) 
Based on shareholder elections, the dividend consisted of approximately $5.1 million in cash and 48,590 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.40 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on June 15, 16, 17, 21, 22, 23, 24, 27, 28 and 29, 2022.

 
 

(5) 
Based on shareholder elections, the dividend consisted of approximately $5.3 million in cash and 42,825 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $25.89 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on March 15, 16, 17, 18, 21, 22, 23, 24, 25 and 28, 2022.

 
 

(6) 
Based on shareholder elections, the dividend consisted of approximately $5.3 million in cash and 41,520 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $26.85 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on January 5, 6, 7, 10, 11, 12, 13, 14, 18 and 19, 2022.

 
 

(7) 
Based on shareholder elections, the dividend consisted of approximately $4.9 million in cash and 38,016 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $26.77 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on September 15, 16, 17, 20, 21, 22, 23, 24, 27 and 28, 2021.

 
 

(8) 
Based on shareholder elections, the dividend consisted of approximately $4.1 million in cash and 33,100 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $25.03 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on June 16, 17, 18, 21, 22, 23, 24, 25, 28 and 29, 2021.

 


106
 

 


(9) 
Based on shareholder elections, the dividend consisted of approximately $3.9 million in cash and 38,580 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.69 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on April 9,12, 13, 14, 15, 16, 19, 20, 21 and 22, 2021.

 
 

(10) 
Based on shareholder elections, the dividend consisted of approximately $3.8 million in cash and 41,388 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.75 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on January 28, 29 and February 1, 2, 3, 4, 5, 8, 9 and 10, 2021.

 



(11) 
Based on shareholder elections, the dividend consisted of approximately $3.8 million in cash and 45,706 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $17.63 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on October 28, 29, 30 and November 2, 3, 4, 5, 6, 9 and 10, 2020.

 
 

(12) 
Based on shareholder elections, the dividend consisted of approximately $3.7 million in cash and 47,098 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $16.45 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on July 30, 31 and August 3, 4, 5, 6, 7, 10, 11 and 12, 2020.

 


(13) 
Based on shareholder elections, the dividend consisted of approximately $5.4 million in cash and 35,682 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $25.44 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on January 24, 27, 28, 29, 30, 31 and February 3, 4, 5 and 6, 2020.

 
 

(14) 
Based on shareholder elections, the dividend consisted of approximately $4.5 million in cash and 34,575 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.34 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on September 13, 16, 17, 18, 19, 20, 23, 24, 25 and 26, 2019.

 


(15) 
Based on shareholder elections, the dividend consisted of approximately $3.6 million in cash and 31,545 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.65 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2019.

 
 

(16) 
Based on shareholder elections, the dividend consisted of approximately $3.5 million in cash and 31,240 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.36 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on March 15, 18, 19, 20, 21, 22, 25, 26, 27 and 28, 2019.

 


107
 

 


(17) 
Based on shareholder elections, the dividend consisted of approximately $3.4 million in cash and 30,796 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $18.88 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on December 18, 19, 20, 21, 24, 26, 27, 28, 31, 2018 and January 2, 2019.

 
 

(18) 
Based on shareholder elections, the dividend consisted of approximately $3.3 million in cash and 25,862 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.35 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on September 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2018.

 
 

(19) 
Based on shareholder elections, the dividend consisted of approximately $2.7 million in cash and 21,562 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.72 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2018.

 
 

(20) 
Based on shareholder elections, the dividend consisted of approximately $2.6 million in cash and 25,354 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $19.91 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on March 13, 14, 15, 16, 19, 20, 21, 22, 23 and 26, 2018.

 



(21) 
Based on shareholder elections, the dividend consisted of approximately $2.5 million in cash and 25,435 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.14 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on December 13, 14, 15, 18, 19, 20, 21, 22, 26 and 27, 2017.

 
 

(22) 
Based on shareholder elections, the dividend consisted of approximately $2.2 million in cash and 33,551 newly issued shares of common stock, or 0.6% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $20.19 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on September 13, 14, 15, 18, 19, 20, 21, 22, 25 and 26, 2017.

 
 

(23) 
Based on shareholder elections, the dividend consisted of approximately $2.3 million in cash and 26,222 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $20.04 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 15, 16, 19, 20, 21, 22, 23, 26 and 27, 2017.

 


(24) 
Based on shareholder elections, the dividend consisted of approximately $2.0 million in cash and 29,096 newly issued shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.38 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on March 15, 16, 17, 20, 21, 22, 23, 24, 27 and 28, 2017.

 


108
 

 


(25) 
Based on shareholder elections, the dividend consisted of approximately $1.6 million in cash and 50,453 newly issued shares of common stock, or 0.9% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $20.25 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on January 27, 30, 31 and February 1, 2, 3, 6, 7, 8 and 9, 2017.

 
 

(26) 
Based on shareholder elections, the dividend consisted of approximately $1.5 million in cash and 58,548 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $17.12 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on October 27, 28, 31 and November 1, 2, 3, 4, 7, 8 and 9, 2016.

 
 

(27) 
Based on shareholder elections, the dividend consisted of approximately $0.7 million in cash and 24,786 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $17.06 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on August 22, 23, 24, 25, 26, 29, 30, 31 and September 1 and 2, 2016.

 
 

(28) 
Based on shareholder elections, the dividend consisted of approximately $1.5 million in cash and 58,167 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $16.32 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on July 27, 28, 29 and August 1, 2, 3, 4, 5, 8 and 9, 2016.

 


(29) 
Based on shareholder elections, the dividend consisted of approximately $1.5 million in cash and 56,728 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.43 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on April 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2016.

 
 

(30) 
Based on shareholder elections, the dividend consisted of approximately $1.4 million in cash and 66,765 newly issued shares of common stock, or 1.2% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.11 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on February 16, 17, 18, 19, 22, 23, 24, 25, 26 and 29, 2016.

 



(31) 
Based on shareholder elections, the dividend consisted of approximately $1.1 million in cash and 61,029 newly issued shares of common stock, or 1.1% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $14.53 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on November 16, 17, 18, 19, 20, 23, 24, 25, 27 and 30, 2015.

 
 

(32) 
Based on shareholder elections, the dividend consisted of approximately $1.1 million in cash and 47,861 newly issued shares of common stock, or 0.9% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.28 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on August 18, 19, 20, 21, 24, 25, 26, 27, 28 and 31, 2015.

 
 

(33) 
Based on shareholder elections, the dividend consisted of approximately $3.4 million in cash and 126,230 newly issued shares of common stock, or 2.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $16.47 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on May 22, 26, 27, 28, 29 and June 1, 2, 3, 4, and 5, 2015.

 


109
 



 

(34)Based
                                            on shareholder elections, the dividend consisted of approximately $0.9 million in cash and
                                            33,766 newly issued shares of common stock, or 0.6% of our outstanding common stock prior
                                            to the dividend payment. The number of shares of common stock comprising the stock portion
                                            was calculated based on a price of $16.78 per share, which equaled 95.0% of the volume weighted
                                            average trading price per share of the common stock on May 15, 18, 19, 20, 21, 22, 26, 27,
                                            28 and 29, 2015.

 


(35) 
Based on shareholder elections, the dividend consisted
    of approximately $0.8 million in cash and 26,858 newly issued shares of common stock, or 0.5% of our outstanding common stock prior
    to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $14.97
    per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on February 13, 17, 18,
    19, 20, 23, 24, 25, 26 and 27, 2015.

 
 

(36) 
Based on shareholder elections, the dividend consisted
    of approximately $0.6 million in cash and 22,283 newly issued shares of common stock, or 0.4% of our outstanding common stock prior
    to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $14.37
    per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on November 14, 17, 18,
    19, 20, 21, 24, 25, 26 and 28, 2014.

 
 

(37) 
Based on shareholder elections, the dividend consisted
    of approximately $2.5 million in cash and 649,500 shares of common stock, or 13.7% of our outstanding common stock prior to the dividend
    payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus
    resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of
    common stock comprising the stock portion was calculated based on a price of $15.439 per share, which equaled the volume weighted
    average trading price per share of the common stock on December 11, 13 and 16, 2013.

 
 

(38) 
Based on shareholder elections, the dividend consisted of $3.3 million in cash and 853,455 shares of common stock, or 22.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.444 per share, which equaled the volume weighted average trading price per share of the common stock on December 14, 17 and 19, 2012.

 
 

(39) 
Based on shareholder elections, the dividend consisted of $2.0 million in cash and 599,584 shares of common stock, or 18.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.117067 per share, which equaled the volume weighted average trading price per share of the common stock on December 20, 21 and 22, 2011.

 
 

(40) 
Based on shareholder elections, the dividend consisted of $1.2 million in cash and 596,235 shares of common stock, or 22.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 10.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $17.8049 per share, which equaled the volume weighted average trading price per share of the common stock on December 20, 21 and 22, 2010.

 
 

(41) 
Based on shareholder elections, the dividend consisted
    of $2.1 million in cash and 864,872 shares of common stock, or 104.0% of our outstanding common stock prior to the dividend payment.
    The amount of cash elected to be received was greater than the cash limit of 13.7% of the aggregate dividend amount, thus resulting
    in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock
    comprising the stock portion was calculated based on a price of $1.5099 per share, which equaled the volume weighted average trading
    price per share of the common stock on December 24 and 28, 2009.

 


110
 

 


(42) 
Based on shareholder elections,
    the dividend consisted of approximately $7.6 million in cash and 29,627 newly issued shares of common stock, or 0.2% of our outstanding
    common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based
    on a price of $25.29 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on June
    15, 16, 20, 21, 22, 23, 26, 27, 28, and 29, 2023.

 
 

(43) 
Based on shareholder elections,
    the dividend consisted of approximately $8.4 million in cash and 35,196 newly issued shares of common stock, or 0.3% of our outstanding
    common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based
    on a price of $24.41 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on September
    15, 18, 19, 20, 21, 22, 25, 26, 27, and 28, 2023.

 
 

(44) 
Based on shareholder elections, the dividend consisted
    of approximately $8.9 million in cash and 37,394 newly issued shares of common stock, or 0.3% of our outstanding common stock prior
    to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $24.47
    per share, which equaled 95% of the volume weighted average trading price per share of the common stock on December 14, 15, 18, 19,
    20, 21, 22, 26, 27, and 28, 2023.

 
 

(45) 
Based on shareholder elections, the dividend consisted of approximately
    $9.0 million in cash and 45,490 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend
    payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.85 per share, which
    equaled 95% of the volume weighted average trading price per share of the common stock on March 15, 18, 19, 20, 21, 22, 25, 26, 27,
    and 28, 2024.

 
We cannot provide any assurance that these measures will
provide sufficient sources of liquidity to support our operations and growth.
 
Subsequent Events
 
Live Oak Facility
 
On March 27, 2024, we and our wholly owned special purpose subsidiary,
Saratoga Investment Funding III LLC (“SIF III”), entered into a credit and security agreement (the “Live Oak Credit
Agreement”), by and among SIF III, as borrower, us, as collateral manager and equity holder, the lenders from time to time parties
thereto, Live Oak Banking Company (“Live Oak”), as administrative agent and collateral agent, U.S. Bank National Association,
as custodian, and U.S. Bank Trust Company, National Association, as collateral administrator, relating to a special purpose vehicle financing
credit facility (the “Live Oak Credit Facility”).
 
The
Live Oak Credit Facility provides for borrowings in U.S. dollars in an aggregate amount of up to $50.0 million. During the first two years
following the closing date, SIF III may request one or more increases in the commitment amount from $50.0 million to an amount not to
exceed $150.0 million, subject to certain terms and conditions and a customary fee. The terms of the Live Oak Credit Agreement require
a minimum drawn amount of $12.5 million at all times during the period ending March 27, 2025 and, thereafter, the greater of: (i) $25.0
million and (ii) 50% of the facility amount in effect at such time. The Live Oak Credit Facility matures on March 27, 2027. Advances are
available during the term of the Live Oak Credit Facility and must be repaid in full at maturity. SIF III may request an extension of
the maturity date by an additional one year, subject to the agreement of the lenders and an extension fee.
 


111
 

 
Advances
under the Live Oak Credit Facility are subject to a borrowing base calculation, and the Live Oak Credit Facility has various eligibility
criteria for loans to be included in the borrowing base. Advances under the Live Oak Credit Facility bear interest at a floating rate
per annum equal to Adjusted Term SOFR plus an applicable margin between 3.50% and 4.25% based on the Live Oak Credit Facility’s
utilization. The Live Oak Credit Agreement also provides for an unused fee of 0.50% on the unused commitments. SIF III’s obligations
to the lenders under the Live Oak Credit Facility are secured by a first priority security interest in substantially all of SIF III’s
assets. In addition, SIF III’s obligations to the lenders under the Live Oak Credit Facility are secured by a pledge by us of our
equity interests in SIF III, which is evidenced by the equity pledge agreement, dated as of March 27, 2024, by and between us, as pledgor,
and Live Oak, as collateral agent for the benefit of the secured parties.
 
In
connection with the Live Oak Credit Agreement, we entered into a loan sale and contribution agreement with SIF III, dated as of March
27, 2024, by and between us, as seller, and SIF III, as purchaser, pursuant to which we will sell or contribute certain loans held by
us to SIF III to be used to support the borrowing base under the Live Oak Credit Facility. The Live Oak Credit Facility permits loan proceeds
and excess cash in SIF III’s collection accounts to be distributed to us at any time based on three business days advance notice,
subject to compliance with various conditions, including the absence of a default or event of default, the absence of an over-advance
against the borrowing base and the absence of a violation of the financial covenants.
 
Contractual obligations
 
The following table shows our payment obligations for repayment of
debt and other contractual obligations at February 29, 2024:
 


  
   
Payment Due by Period 

Long-Term Debt Obligations 
Total  
Less Than  1 Year  
1 - 3 Years  
3 - 5  Years  
More Than 5 Years 

  
   
($ in thousands) 

Encina credit facility   
$35,000  
$-  
$35,000  
$-  
$- 

SBA debentures 
 214,000  
 -  
 -  
 -  
 214,000 

8.75% 2025 Notes   
 20,000  
 -  
 20,000  
 -  
 - 

7.00% 2025 Notes 
 12,000  
 -  
 12,000  
 -  
 - 

7.75% 2025 Notes   
 5,000  
 -  
 5,000  
 -  
 - 

4.375% 2026 Notes 
 175,000  
 -  
 175,000  
 -  
 - 

4.35% 2027 Notes   
 75,000  
 -  
 75,000  
 -  
 - 

6.00% 2027 Notes 
 105,500  
 -  
 -  
 105,500  
 - 

6.25% 2027 Notes   
 15,000  
 -  
 -  
 15,000  
 - 

8.00% 2027 Notes 
 46,000  
 -  
 -  
 46,000  
 - 

8.125% 2027 Notes   
 60,375  
 -  
 -  
 60,375  
 - 

8.50% 2028 Notes 
 57,500  
 -  
 -  
 57,500  
 - 

Total Long-Term Debt Obligations 
$820,375  
$-  
$322,000  
$284,375  
$214,000 

 
Off-balance sheet arrangements
 
At February 29, 2024 and February 28, 2023, our
off-balance sheet arrangements consisted of $132.4 million and $108.8 million, respectively, of unfunded commitments outstanding to provide
debt financing to its portfolio companies or to fund limited partnership interests. Such commitments are generally up to our discretion
to approve, or the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk
in excess of the amount recognized in our consolidated statements of assets and liabilities.
 


112
 

 
A summary of the unfunded commitments outstanding
as of February 29, 2024 and February 28, 2023 is shown in the table below (dollars in thousands):
 


  
February 29, 
2024  
February 28, 
2023 

At Company’s discretion 
   
  

ActiveProspect, Inc. 
$10,000  
$10,000 

Artemis Wax Corp.  
 23,500  
 - 

Ascend Software, LLC 
 5,000  
 5,000 

Granite Comfort, LP  
 750  
 15,000 

JDXpert 
 5,000  
 5,000 

LFR Chicken LLC  
 -  
 4,000 

Pepper Palace, Inc. 
 1,898  
 3,000 

Procurement Partners, LLC  
 4,250  
 4,250 

Saratoga Senior Loan Fund I JV, LLC 
 8,548  
 8,548 

Sceptre Hospitality Resources, LLC  
 5,000  
 5,000 

Stretch Zone Franchising, LLC 
 3,750  
 - 

VetnCare MSO, LLC  
 10,000  
 - 

Total 
$77,696  
$59,798 

  
    
   

At portfolio company’s discretion - satisfaction of certain financial and nonfinancial covenants required 
    
   

Alpha Aesthetics Partners OpCo, LLC 
$6,500  
$- 

ARC Health OpCo LLC  
 2,585  
 10,773 

Artemis Wax Corp. 
 -  
 8,500 

Ascend Software, LLC  
 -  
 3,200 

Axero Holdings, LLC - Revolver 
 500  
 500 

Axiom Medical Consulting, LLC  
 2,000  
 - 

BQE Software, Inc. 
 3,250  
 - 

C2 Educational Systems  
 3,000  
 - 

Davisware, LLC 
 750  
 - 

Exigo, LLC  
 -  
 4,167 

Exigo, LLC - Revolver 
 1,042  
 833 

Gen4 Dental Partners Holdings, LLC  
 -  
 11,000 

GoReact 
 2,500  
 2,500 

Granite Comfort, LP  
 11,637  
 - 

JDXpert 
 -  
 1,000 

Inspect Point Holding, LLC  
 1,500  
 - 

Pepper Palace, Inc. - Delayed Draw Term Loan 
 -  
 2,000 

Pepper Palace, Inc. - Revolver  
 2,500  
 2,500 

Procurement Partners, LLC 
 -  
 1,000 

Stretch Zone Franchising, LLC  
 1,500  
 - 

VetnCare MSO, LLC 
 15,319  
 - 

Zollege PBC  
 150  
 1,000 

  
 54,733  
 48,973 

Total  
$132,429  
$108,771 

 
We believe our assets will provide adequate coverage
to satisfy these unfunded commitments. As of February 29, 2024, we had cash and cash equivalents of $8.7 million and $31.8 million in
available borrowings under the Encina Credit Facility.
 


113
 

 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
SUTHERLAND TO UPDATE
 
Our business activities contain elements of market
risk. We consider the fluctuation in interest rates to be our principal market risk. Managing this risk is essential to our business.
Accordingly, we have systems and procedures designed to identify and analyze our risks, to establish appropriate policies and thresholds
and to continually monitor this risk and thresholds by means of administrative and information technology systems and other policies and
processes.
 
Interest rate risk is defined as the sensitivity
of our current and future earnings to interest rate volatility, including relative changes in different interest rates, variability of
spread relationships, the difference in re-pricing intervals between our assets and liabilities and the effect that interest rates may
have on our cash flows. Changes in the general level of interest rates can affect our net interest income, which is the difference between
the interest income earned on interest earning assets and our interest expense incurred in connection with our interest-bearing debt and
liabilities. Changes in interest rates can also affect, among other things, our ability to acquire leveraged loans, high yield bonds and
other debt investments and the value of our investment portfolio.
 
Our investment income is affected by fluctuations
in various interest rates, including SOFR and the prime rate. Substantially all of our portfolio is, and we expect will continue to be,
comprised of floating rate investments that utilize SOFR or an alternate rate. Since March 2022, the Federal Reserve has been rapidly
raising interest rates in response to ongoing inflation concerns. Although the Federal Reserve left its benchmark rates steady in the
fourth quarter of 2023, it has indicated that additional rate increases in the future may be necessary to mitigate inflationary pressures
and there can be no assurance that the Federal Reserve will not make upwards adjustments to the federal funds rate in the future. However,
there are reports that the Federal Reserve may begin to cut the benchmark rates in 2024. In a rising interest rate environment, our cost
of funds would increase, which could reduce our net investment income if there is not a corresponding increase in interest income generated
by our investment portfolio. It is possible that the Federal Reserve’s tightening cycle could result in a recession in the United
States, which would likely decrease interest rates. A prolonged reduction in interest rates will reduce our gross investment income and
could result in a decrease in our net investment income if such decreases in base rates, such as SOFR, are not offset by corresponding
increases in the spread over such base rates that we earn on any portfolio investments, a decrease in in our operating expenses, including
with respect to our income incentive fee, or a decrease in the interest rate of our floating interest rate liabilities. Our interest expense
is affected by fluctuations in SOFR on our Encina Credit Facility. In addition, all of our assets have been transitioned from LIBOR to
an acceptable replacement rate, such as SOFR.
 
At
February 29, 2024, we had $785.4 million of borrowings outstanding. There were $35.0 million borrowings outstanding under the Encina Credit
Facility as of February 29, 2024. As of February 29, 2024, on a fair value basis, approximately
0.5% of our debt investments bear interest at a fixed-rate and approximately 99.5% of our debt investments bear interest at a floating
rate. As of February 29, 2024, 0% of our floating rate debt investments are subject to interest rate floors.  Additionally,
the Encina Credit Facility also is subject to a floating interest rate and is currently paid based on floating Term SOFR rate.
 
We have analyzed the potential impact of changes
in interest rates on interest income from investments. Assuming that our investments as of February 29, 2024 were to remain constant for
a full fiscal year and no actions were taken to alter the existing interest rate terms, a hypothetical change of a 1.0% increase in interest
rates would cause a corresponding increase of approximately $10.4 million to our interest income. Conversely, a hypothetical change of
a 1.0% decrease in interest rates would cause a corresponding decrease of approximately $10.4 million to our interest income.
 
Changes in interest rates would have no impact
to our current interest and debt financing expense, as all our borrowings except for our credit facility are fixed rate, and our credit
facility is currently undrawn.
 
Although management believes that this measure
is indicative of our sensitivity to interest rate changes, it does not adjust for potential changes in credit quality, size and composition
of the assets on the statements of assets and liabilities and other business developments that could magnify or diminish our sensitivity
to interest rate changes, nor does it account for divergences in SOFR and the commercial paper rate, which have historically moved in
tandem but, in times of unusual credit dislocations, have experienced periods of divergence. Accordingly, no assurances can be given that
actual results would not materially differ from the potential outcome simulated by this estimate.
 


114
 

 
For further information, the following table shows
the approximate annualized increase or decrease in the components of net investment income due to hypothetical base rate changes in interest
rates, assuming no changes in our investments and borrowings as of February 29, 2024.
 


   
Increase  
(Increase)  
Increase  
Increase  
Increase 

Basis  
(Decrease)  
Decrease  
(Decrease) in Net  
(Decrease) in Net  
(Decrease) in Net 

Point  
in Interest  
in Interest  
Investment  
Investment  
Investment 

Change  
Income  
Expense  
Income  
Income*  
Income per Share 

   
($ in thousands)  
  

 -100  
$(10,431) 
$350  
$(10,081) 
$(8,065) 
$(0.59)

 -50  
 (5,215) 
 175  
 (5,040) 
 (4,032) 
 (0.30)

 -25  
 (2,608) 
 88  
 (2,520) 
 (2,016) 
 (0.15)

 25  
 2,608  
 (88) 
 2,520  
 2,016  
 0.15 

 50  
 5,215  
 (175) 
 5,040  
 4,032  
 0.30 

 100  
 10,431  
 (350) 
 10,081  
 8,065  
 0.59 

 200  
 20,862  
 (700) 
 20,162  
 16,130  
 1.18 

 300  
 31,448  
 (1,050) 
 30,398  
 24,318  
 1.78 

 400  
 42,079  
 (1,400) 
 40,679  
 32,543  
 2.38 

 
 


*Adjusts Net Interest Income for the impact of the first incentive
fee on Net Investment Income

 
The table above assumes no defaults or prepayments
by portfolio companies over the next twelve months. The hypothetical results would also be impacted by the changes in the amount of debt
outstanding under our Encina Credit Facility, with an increase (decrease) in the debt outstanding under the Encina Credit Facility resulting
in an (increase) decrease in the hypothetical interest expense.
 
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
Our consolidated financial statements are annexed
to this Annual Report beginning on page F-1. In addition, the Financial Statements of Saratoga Investment Corp. CLO 2013-1, Ltd. are annexed
to this Annual Report beginning on page S-1.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE 
 
None.
 
ITEM 9A. CONTROLS AND PROCEDURES 
 
Evaluation of disclosure controls and procedures
 
As of the end of the period covered by this report,
we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer
and our chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined
in Rule 13a-15(e) and 15d-15(e) of the Exchange Act). Based on that evaluation, our chief executive officer and our chief financial officer
have concluded that our current disclosure controls and procedures are effective in facilitating timely decisions regarding required disclosure
of any material information relating to us that is required to be disclosed by us in the reports we file or submit under the Exchange
Act. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily
was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
 

115
 

 
Management’s annual report on internal control over financial
reporting
 
The Company’s management is responsible
for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the
Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with U.S. GAAP. Internal
control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance
that the transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that the
receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control
over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with polices
or procedures may deteriorate.
 
Under the supervision and with participation of
our Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of internal control
over financial reporting based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). Based on the Company’s evaluation under the framework in Internal
Control—Integrated Framework (2013), management concluded that the Company’s internal control over financial reporting was
effective as of February 29, 2024.
 
Changes in internal controls over financial reporting
 
There have been no changes in the Company’s
internal control over financial reporting (as defined in Rule 13a-15(f) of Exchange Act) that occurred during our most recently completed
fiscal year that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial
reporting.
 
ITEM 9B. OTHER INFORMATION
 

a)None.

 

b)During the fiscal quarter ended February 29, 2024, no director
or officer of the Company has entered into (i) any contract, instruction or written plan for the purchase or sale of securities of the
Company intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or (ii) any non-Rule 10b5-1 trading
arrangement.

 
The Company has adopted insider trading policies and procedures
governing the purchase, sale, and disposition of the Company’s securities by officers and directors of the Company that are reasonably
designed to promote compliance with insider trading laws, rules and regulations.
 
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
 
Not applicable.
 


116
 

 
PART III
 
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
PLEASE HAVE ROCHELLE REVIEW THIS SECTION
 
Director and Executive Officer Information 
 
Directors and Executive Officers
 
The following table sets forth the names, ages
and positions held by each of our directors, followed by a brief biography of each individual, including the business experience of each
individual during the past five years and the specific qualifications that led to the conclusion that each individual should serve as
a director.
 


Name
 
Age
 
Position
 
Director Since
 
Term Expires

Interested Directors
 
 
 
 
 
 
 
 

Christian L. Oberbeck
 
64
 
Chairman of the Board, Chief Executive Officer and President
 
2010
 
2024 

Henri J. Steenkamp
 
48
 
Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary
 
2020
 
2026 

Independent Directors
 
 
 
 
 
 
 
 

Steven M. Looney
 
74
 
Director
 
2007
 
2025 

Charles S. Whitman III
 
82
 
Director
 
2007
 
2025 

G. Cabell Williams
 
70
 
Director
 
2007
 
2026 

 
Christian L. Oberbeck— Mr.
Oberbeck has over 37 years of experience in leveraged finance, including acquisition financing, distressed investing, and private equity,
and has been involved in originating, structuring, negotiating, consummating, managing, operating, and monitoring minority and control
investments in a broad array of businesses. Mr. Oberbeck is the Founder and Managing Member of Saratoga Investment Advisors, LLC, the
Company’s investment adviser, and has served as the Chairman of the Board, Chief Executive Officer, and President of the Company
since 2010. Mr. Oberbeck is also the Managing Partner of Saratoga Partners, a middle-market private equity investment firm. Prior to assuming
full management responsibility for Saratoga Partners in 2008, Mr. Oberbeck had co-managed Saratoga Partners since 1995. Mr. Oberbeck joined
Dillon Read and Saratoga Partners from Castle Harlan, Inc., a corporate buyout firm which he had joined at its founding in 1987 and was
a Managing Director, leading successful investments in manufacturing and financial services companies. Prior to that, he worked in the
Corporate Development Group of Arthur Young and in corporate finance at Blyth Eastman Paine Webber. Mr. Oberbeck has been a director of
numerous middle-market companies. Mr. Oberbeck graduated from Brown University in 1982 with a BS in Physics and a BA in Mathematics. In
1985, he earned an MBA from Columbia University. Mr. Oberbeck’s qualifications as a director include his extensive experience in
the investment and finance industry, as well as his intimate knowledge of the Company’s operations gained through his service as
an executive officer.
 

Steven M. Looney — Mr. Looney
has served as member of our Board since 2007. Mr. Looney is a Managing Director of Peale Davies & Co. Inc., a strategic advisory firm
specializing in change management and revenue enhancement for middle-market enterprises, and is a CPA and an attorney. Mr. Looney has
served as a consultant and director to numerous companies in the healthcare, manufacturing and services industries. Between 2000 and 2005,
he served as Senior Vice President and Chief Financial Officer of PCCI, Inc., a private IT staffing and outsourcing firm. Between 1992
and 2000, Mr. Looney worked at WH Industries as Chief Financial and Administrative Officer. Mr. Looney is a trustee of Excellent Education
for Everyone, a nonprofit organization and founder of its affiliate, TradePrep and a director of ICG Loan Funding Ltd., a manager of and
investor in collateralized loan portfolios in Europe and the United States. Mr. Looney graduated summa cum laude from the University of
Washington with a B.A. degree in accounting and received a J.D. from the University of Washington School of Law where he was a member
of the law review. He began his career at the SEC. Mr. Looney’s qualifications as director include his experience as a Managing
Director of Peale Davies & Co., as Chief Financial and Administrative Officer of WH Industries and as General Counsel and Chief Compliance
Officer of A.G. Becker-Warburg Paribas Becker, as well as his financial, accounting and legal expertise. 
 
Charles S. Whitman III—Mr.
Whitman has served as member of our Board since 2007. Mr. Whitman is senior counsel (retired) at Davis Polk & Wardwell LLP. Mr. Whitman
was a partner in Davis Polk’s Corporate Department for 28 years, representing clients in a broad range of corporate finance matters,
including shelf registrations, securities compliance for financial institutions, foreign asset privatizations, and mergers and acquisitions.
From 1971 to 1973, Mr. Whitman served as Executive Assistant to three successive Chairmen of the SEC. Mr. Whitman graduated from Harvard
College and graduated magna cum laude from Harvard Law School with a LL.B. Mr. Whitman also received an LL.M. from Cambridge University
in England. Mr. Whitman’s qualifications as director include his 28 years of experience representing clients, including AT&T,
Exxon Mobil, General Motors and BP, in securities matters as a partner in Davis Polk’s corporate department. 
 


117
 

 

Henri J. Steenkamp— Mr. Steenkamp
has served as the Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary of the Company, the Company’s investment
adviser, Saratoga Investment Advisors, since 2014. Mr. Steenkamp has also served as a director of the Company since 2020. Mr. Steenkamp
has served as the Chief Financial Officer of MF Global Holdings Ltd., a broker in commodities and derivatives, from April 2011. Prior
to that, Mr. Steenkamp held the position of Chief Accounting Officer and Global Controller at MF Global for four years. He joined MF Global,
then Man Financial, in 2006 as Vice President of External Reporting and Accounting Policy. After MF Global filed for bankruptcy protection
in October 2011, he continued to serve as Chief Financial Officer through January 2013. Before joining MF Global, Mr. Steenkamp spent
eight years with PricewaterhouseCoopers (“PwC”), including four years in Transaction Services in its New York office, managing
a variety of capital-raising transactions on a global basis. His focus was also on the SEC registration and public company filing process,
including technical accounting. He spent four years with PwC in South Africa, where he served as an auditor primarily for SEC registrants
and assisted South African companies as they went public in the United States Mr. Steenkamp is a chartered accountant and holds an honors
degree in Finance. Mr. Steenkamp’s qualifications as a director include his extensive experience in the investment and finance industry,
as well as his intimate knowledge of the Company’s operations gained through his service as an executive officer.
 
G. Cabell Williams— Mr. Williams
has served as member of our Board since 2007. Mr. Williams has served as the Managing General Partner of Williams and Gallagher, a private
equity partnership located in Chevy Chase, Maryland since 2004. Mr. Williams is a Partner, Senior Manager and Director of Farragut Capital
Partners, which is a Mezzanine Fund based out of Chevy Chase, Maryland. In 2004, Mr. Williams concluded a 23-year career at Allied Capital
Corporation, a business development company based in Washington, DC, which was acquired by Ares Capital Corporation in 2010. While at
Allied, Mr. Williams held a variety of positions, including President, CIO and finally Managing Director following Allied’s merger
with its affiliates in 1998. From 1991 to 2004, Mr. Williams either led or co-managed the firm’s Private Equity Group. For the nine
years prior to 1999, Mr. Williams led Allied’s Mezzanine investment activities. For 15 years, Mr. Williams served on Allied’s
Investment Committee where he was responsible for reviewing and approving all of the firm’s investments. Prior to 1991, Mr. Williams
ran Allied’s Minority Small Business Investment Company. He also founded Allied Capital Commercial Corporation, a real estate investment
vehicle. Mr. Williams has served on the board of directors of various public and private companies. Mr. Williams attended The Landon School,
and graduated from Mercersburg Academy and Rollins College, receiving a B.S. in Business Administration from the latter. Mr. Williams’
qualifications as director include his 28 years of experience managing investment activities at Allied Capital, where he served in a variety
of positions, including President, CIO and Managing Director.
  
Code of Business Conduct and Ethics
 
We have adopted a Code of Business Conduct and
Ethics which applies to, among others, our executive officers, including our principal executive officer and principal financial officer,
as well as every officer, director and employee of the Company. Requests for copies should be sent in writing to Saratoga Investment Corp.,
535 Madison Avenue, New York, New York 10022. The Company’s Code of Business Conduct and Ethics is also available on our website
at www.saratogainvestmentcorp.com.
 
If we make any substantive amendment to, or grant
a waiver from, a provision of our Code of Business Conduct and Ethics, we will promptly disclose the nature of the amendment or waiver
on our website at www.saratogainvestmentcorp.com.
 
Delinquent Section 16(a) Reports
 
Section 16(a) of the Exchange Act requires the
Company’s officers and directors, and persons who own more than 10% of our shares, to file reports of securities ownership and changes
in such ownership with the SEC. Officers, directors, and greater than 10% shareholders also are required by SEC rules to furnish the Company
with copies of all Section 16(a) forms they file.
 
Based solely on the Company’s review of
Forms 3, 4 and 5 filed by such persons and information provided by the Company’s directors and officers, the Company believes that
during the year ended February 29, 2024, all Section 16(a) filing requirements applicable to such persons were met in a timely manner,
with the following inadvertent exceptions: Christian L. Oberbeck filed late a Form 4 with respect to one transaction in our shares during
the reporting period.
 
Practices and Policies Regarding Hedging, Speculative Trading and
Pledging of Securities  
 
Our insider trading policy generally prohibits
the Company’s and our Investment Adviser’s directors, officers and employees from engaging in any short-term trading, short
sales and other speculative transactions involving our securities, including buying or selling puts or calls or other derivative securities
based on our securities. In addition, such persons are generally prohibited under our insider trading policy from entering into hedging
or monetization transactions or similar arrangements, as well as pledging our securities in a margin account or as collateral for a loan,
except in limited circumstances that are pre-approved by our chief compliance officer.  
 


118
 

 
Insider Trading Arrangements and Policies
 
We have adopted insider trading policies and procedures governing the
purchase, sale, and disposition of our securities by our officers and directors of that are reasonably designed to promote compliance
with insider trading laws, rules and regulations.
 
Nomination of Directors
 
There have been no material changes to the procedures
by which stockholders may recommend nominees to our board of directors implemented since the filing of our Proxy Statement for our 2018
Annual Meeting of Stockholders.
 
Audit Committee
 
The current members of the audit committee are
Steven M. Looney (Chairman), Charles S. Whitman III and G. Cabell Williams. The board of directors has determined that Mr. Looney is an
“audit committee financial expert” as defined under Item 407 of Regulation S-K of the Exchange Act and that each of Messrs.
Whitman and Williams are “financially literate” as required by NYSE corporate governance standards. All of these members are
independent directors.
 
ITEM 11. EXECUTIVE COMPENSATION 
 
Executive Compensation
 
Currently, none of our executive officers are
compensated by us. We currently have no employees, and each of our executive officers is also an employee of Saratoga Investment Advisors.
Services necessary for our business are provided by individuals who are employees of Saratoga Investment Advisors, pursuant to the terms
of the Management Agreement and the Administration Agreement.
 
Director Compensation 
 
Our independent directors receive an annual fee
of $70,000. They also receive $3,000 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each
board meeting and receive $1,500 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each committee
meeting. In addition, the chairman of the audit committee receives an annual fee of $12,500 and the chairman of each other committee receives
an annual fee of $6,000 for their additional services in these capacities. In addition, we have purchased directors’ and officers’
liability insurance on behalf of our directors and officers. Independent directors have the option to receive their directors’ fees
in the form of our common stock issued at a price per share equal to the greater of NAV or the market price at the time of payment. No
compensation is paid to directors who are “interested persons.”
  
The following table sets forth information concerning
total compensation earned by or paid to each of our directors during the fiscal year ended February 29, 2024:
 


  
Fees Earned  or Paid in  Cash  
Total 

Interested Directors 
   
  

Christian L. Oberbeck(1) 
$-  
$- 

Henri J. Steenkamp(1) 
 -  
 - 

Independent Directors 
    
   

Steven M. Looney 
$102,500  
$102,500 

Charles S. Whitman III 
 96,000  
 96,000 

G. Cabell Williams 
 96,000  
 96,000 

 

 


(1)No compensation was paid to directors who are interested persons
of us as defined in the 1940 Act.

 
Compensation Committee Interlocks and Insider Participation
 
The current members of the compensation committee
are G. Cabell Williams (Chairman), Steven M. Looney and Charles S. Whitman III. All of these members are independent directors. The compensation
committee is responsible for overseeing the Company’s compensation policies generally and making recommendations to the board of
directors with respect to incentive compensation and equity-based plans of the Company that are subject to board of directors approval,
evaluating executive officer performance and reviewing the Company’s management succession plan, overseeing and setting compensation
for the Company’s directors and, as applicable, its executive officers and, as applicable, preparing the report on executive officer
compensation that SEC rules require to be included in our Annual Report on Form 10-K. Currently, none of our executive officers are compensated
by the Company and as such the compensation committee is not required to produce a report on executive officer compensation for inclusion
in our Annual Report on Form 10-K.
 


119
 

 
During fiscal year ended February 29, 2024 none
of the Company’s executive officers served on the board of directors (or a compensation committee thereof or other board committee
performing equivalent functions) of any entities that had one or more executive officers serve on the compensation committee or on the
board of directors. No current or past executive officers or employees of the Company or its affiliates serve on the compensation committee.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
 
The following table sets forth, as of May 3, 2024,
the beneficial ownership of each current director, the nominees for director, the Company’s executive officers, each person known
to us to beneficially own 5.0% or more of the outstanding shares of our common stock, and the executive officers and directors as a group.
 
The percentage ownership is based on 13,698,966
shares of common stock outstanding as of May 3, 2024. Shares of common stock that are subject to warrants or other convertible securities
currently exercisable or exercisable within 60 days thereof, are deemed outstanding for the purposes of computing the percentage ownership
of the person holding these options or convertible securities, but are not deemed outstanding for computing the percentage ownership
of any other person. Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power
with respect to securities. To our knowledge, unless otherwise indicated in the footnotes to this table, the persons and entities named
in the table have sole voting and sole investment power with respect to all shares beneficially owned. Unless otherwise indicated by
footnote, the address for each listed individual is Saratoga Investment Corp., 535 Madison Avenue, New York, New York 10022.
 


Name of Beneficial Owners 
Number of Shares of Common Stock Beneficially Owned  
Percent of  Class 

Interested Directors 
   
  

Christian L. Oberbeck 
 1,520,712(1) 
 11.1%

Henri J. Steenkamp 
 28,459  
 * 

Independent Directors 
    
   

Steven M. Looney 
 4,258  
 * 

Charles S. Whitman III 
 4,518  
 * 

G. Cabell Williams 
 88,773  
 * 

All Directors as a Group 
 1,646,720  
 12.0%

Owners of 5% or more of our common stock 
    
   

Elizabeth Oberbeck(2) 
 549,183  
 4.0%

Thomas V. Inglesby 
 352,236  
 2.6%

Michael J. Grisius 
 167,216  
 1.2%

 

 



*
Less than 1.0%

 
Mr.
Oberbeck, Mr. Grisius and Mr. Inglesby are affiliates who make up 17.2% of the ownership of SAR.
 

(1)Includes 644,248 shares of common stock directly held by
Mr. Oberbeck, 217,774 shares of common stock held by CLO Partners LLC, an entity wholly owned by Mr. Oberbeck, 67,465 shares of common
stock directly held by Mr. Oberbeck’s children, for which Mr. Oberbeck retains the voting rights, 1,318 shares of common stock directly
held by Mr. Oberbeck’s wife, for which Mr. Oberbeck retains the voting rights, and 549,183 shares of common stock directly held by Elizabeth
Oberbeck. See footnote 2 below.

 

(2)Based on information included in Amendment No. 2 to Schedule
13D filed on January 16, 2020, which amends and supplements the statements on Schedule 13D originally filed with the Securities and Exchange
filed jointly by Christian L. Oberbeck, Elizabeth Oberbeck, Saratoga Investment Advisors and CLO Partners LLC on November 4, 2014. Pursuant
to an Agreement Relating to Shares of Common Stock of Saratoga Investment Corp. (the “Transfer Agreement”), Christian L.
Oberbeck transferred 744,183 shares of common stock beneficially owned by him to Elizabeth Oberbeck. Elizabeth Oberbeck has full ownership
rights with respect to the shares, including without limitation, the right to (A) receive any cash and/or stock dividends and distributions
paid on or with respect to the shares and (B) sell the shares in accordance with the provisions of the Transfer Agreement and receive
all proceeds therefrom. However, pursuant to the terms of the Transfer Agreement, Christian L. Oberbeck has retained the right to vote
the shares, except that Elizabeth Oberbeck has retained the right to vote the shares on all matters submitted to shareholders with respect
to any matter that could give rise to dissenters or other rights of an objecting shareholder under Maryland General Corporation Law.
The Transfer Agreement also contains a right of first refusal that requires Elizabeth Oberbeck to offer Christian L. Oberbeck the opportunity
to purchase any shares of Common Stock owned by her prior to her intended sale of the shares. Any such purchases may be made either directly
by Mr. Oberbeck or through entities affiliated with him.

 


120
 

 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE 
 
Transactions with Related Persons
 
We have entered into a Management Agreement with
Saratoga Investment Advisors, LLC. We have also entered into a license agreement with Saratoga Investment Advisors, LLC, pursuant to which
Saratoga Investment Advisors has agreed to grant us a non-exclusive, royalty-free license to use the name “Saratoga.” In addition,
pursuant to the terms of the Administration Agreement, Saratoga Investment Advisors, LLC provides us with the office facilities and administrative
services necessary to conduct our day-to-day operations. Mr. Oberbeck, our chief executive officer, is the primary investor in and controls
Saratoga Investment Advisors, LLC.
 
Review, Approval or Ratification of Transactions with Related Persons
 
The Audit Committee of our board is required to
review and approve any transactions with related persons (as such term is defined in Item 404 of Regulation S-K).
 
Director Independence
 
In accordance with rules of the NYSE, the board
of directors annually determines the independence of each director. No director is considered independent unless the board of directors
has determined that he or she has no material relationship with the Company. The Company monitors the status of its directors and officers
through the activities of the Company’s Nominating and Corporate Governance Committee and through a questionnaire to be completed
by each director no less frequently than annually, with updates periodically if information provided in the most recent questionnaire
has changed.
 
In order to evaluate the materiality of any such
relationship, the board of directors uses the definition of director independence set forth in the NYSE Listed Company Manual. Section
303A.00 of the NYSE Listed Company Manual provides that business development companies, or BDCs, such as the Company, are required to
comply with all of the provisions of Section 303A applicable to domestic issuers other than Sections 303A.02, the section that defines
director independence.
 
Section 303A.00 provides that a director of a
BDC shall be considered to be independent if he or she is not an “interested person” of the Company, as defined in Section
2(a)(19) of the 1940 Act. Section 2(a)(19) of the 1940 Act defines an “interested person” to include, among other things,
any person who has, or within the last two years had, a material business or professional relationship with the Company.
 
The board of directors has determined that each
of the directors is independent and has no relationship with the Company, except as a director and stockholder of the Company, with the
exception of Messrs. Oberbeck and Grisius who are interested persons of the Company due to their positions as officers of the Company
and its Investment Adviser.
 


121
 

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 
 
Independent Registered Public Accounting Firm 
 
For the years ended February 29, 2024 and February
28, 2023, the Company incurred the following fees for services provided by Ernst & Young LLP, including expenses:
 


  
Fiscal Year Ended February 29, 2024  
Fiscal Year Ended February 28,  2023 

Audit Fees 
$642,300  
$584,500 

Tax Fees 
 50,350  
 46,200 

Total Fees 
$692,650  
$630,700 

 
In addition to the services listed above, Ernst
& Young LLP provided audit services to the Company’s subsidiaries. The following are the related fees:
 


  
Fiscal Year Ended February 29, 2024  
Fiscal Year  Ended  February 28, 2023 

CLO Audit Fees 
$—    
$—   

Tax Services for Company’s Subsidiaries 
 —    
 —   

All Other Fees 
 84,925  
 97,750 

Total Fees 
$84,925  
$97,750 

 
Audit Fees. Audit fees include fees for
services that normally would be provided by the accountant in connection with statutory and regulatory filings or engagements and that
generally only the independent accountant can provide. In addition to fees for the audit of our annual consolidated financial statements,
the audit of the effectiveness of our internal control over financial reporting and the review of our quarterly consolidated financial
statements in accordance with generally accepted auditing standards, this category contains fees for comfort letters, statutory audits,
consents, and assistance with and review of documents filed with the SEC.
 
Tax Fees. Tax fees include services in
conjunction with preparation of the Company’s tax return.
 
All Other Fees. Fees for other services
would include fees for products and services other than the services reported above.
 
It is the policy of the audit committee to pre-approve
all audit, review or attest engagements and permissible non-audit services to be performed by our independent registered public accounting
firm.
 


122
 

 
PART IV
 
ITEM 15. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
 
The following documents are filed or incorporated
by reference as part of this Annual Report:
 
1. Consolidated Financial Statements
 
The following consolidated financial statements
of the Company are filed herewith: Report of Independent Registered Public Accounting Firm
 
Consolidated Statements of Assets and Liabilities
as of February 29, 2024 and February 28, 2023
 
Consolidated Statements of Operations for the
years ended February 29, 2024, February 28, 2023 and February 28, 2022
 
Consolidated Schedules of Investments as of February
29, 2024 and February 28, 2023
 
Consolidated Statements of Changes in Net Assets
for the years ended February 29, 2024, February 28, 2023 and February 28, 2022
 
Consolidated Statements of Cash Flows for the
years ended February 29, 2024, February 28, 2023 and February 28, 2022
 
Notes to Consolidated Financial Statements
 
2. Financial Statement Schedules
 
Reference is made to the Index to Other Financial
Statements on page S-1.
 


123
 

 
3. Exhibits required to be filed by Item 601 of Regulation S-K
 
The following exhibits are filed as part of this
report or hereby incorporated by reference to exhibits previously filed with the SEC:
 
EXHIBIT INDEX
 



Exhibit
Number
 
Description

 
 
 

3.1(a)
 
Articles of Incorporation of Saratoga Investment Corp. (incorporated by reference to Saratoga Investment Corp.’s Form 10-Q for the quarterly period ended May 31, 2007).

 
 
 

3.1(b)
 
Articles of Amendment of Saratoga Investment Corp. (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed August 3, 2010).

 
 
 

3.1(c)
 
Articles of Amendment of Saratoga Investment Corp. (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed August 13, 2010).

 
 
 

3.2
 
Third Amended and Restated Bylaws of Saratoga Investment Corp. (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 10-Q filed January 6, 2021)

 
 
 

4.1
 
Specimen certificate of Saratoga Investment Corp.’s common stock, par value $0.001 per share. (incorporated by reference to Saratoga Investment Corp.’s Registration Statement on Form N-2, File No. 333-169135, filed on September 1, 2010).

 
 
 

4.2
 
Registration Rights Agreement dated July 30, 2010 between GSC Investment Corp., GSC CDO III L.L.C., and the investors party thereto (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on August 3, 2010).

 
 
 

4.3
 
Dividend Reinvestment Plan (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on September 24, 2014).

 
 
 

4.4
 
Form of Indenture by and between the Company and U.S. Bank National Association, as trustee (incorporated by reference to Saratoga Investment Corp.’s Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2, File No. 333-186323 filed April 30, 2013).

 
 
 

4.5
 
Form of Articles Supplementary Establishing and Fixing the Rights and Preferences of Preferred Stock (incorporated by reference to Saratoga Investment Corp.’s registration statement on Form N-2 Pre-Effective Amendment No. 1, File No. 333-196526, filed on December 5, 2014).

 
 
 

4.6
 
Fifth Supplemental Indenture
    between Saratoga Investment Corp. and U.S. Bank National Association, as trustee, relating to 7.75% Notes due 2025 (incorporated
    by reference to Saratoga Investment Corp.’s Quarterly Report 
    on Form 10-Q, filed on January 10, 2023).

 
 
 

4.7
 
Seventh Supplemental Indenture between Saratoga Investment Corp. and U.S. Bank National Association, as trustee, relating to 6.25% Notes due 2027 (incorporated by reference to Saratoga Investment Corp.’s Quarterly Report on Form 10-Q, filed on January 10, 2023).   

 
 
 

4.8
 
Eighth Supplemental Indenture between the Saratoga Investment Corp. and U.S. Bank National Association, as trustee, relating to the 4.375% Note due 2026 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (File No. 814-00732) filed on March 10, 2021).

 
 
 

4.9
 
Ninth Supplemental Indenture between Saratoga Investment Corp. and U.S. Bank National Association, as trustee, relating to the 4.375% Note due 2027 (incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 814-00732) filed on January 19, 2022).

 
 
 

4.10
 
Tenth  Supplemental Indenture between Saratoga Investment Corp. and U.S. Bank National Association, as trustee, relating to the 6.00% Note due 2027 (incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 814-00732) filed on April 27, 2022).

 
 
 

4.11
 
Eleventh Supplemental Indenture between Saratoga Investment Corp. and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as trustee, relating to the 7.00% Notes due 2025 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q, filed on January 10, 2023).   

 
 
 

4.12
 
Twelfth Supplemental Indenture between Saratoga Investment Corp. and U.S. Bank Trust Company, National Association, as trustee, relating to the 8.00% Notes due 2027 (incorporated by reference to the Saratoga Investment Corp.’s Current Report on Form 8-K (File No. 813-00732) filed on October 27, 2022).

 
 
 

4.13
 
Thirteenth Supplemental Indenture between Saratoga Investment Corp. and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as trustee, relating to the 8.125% Notes due 2027 (incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on December 13, 2022).

 




124
 

 



4.14
 
Fifteenth Supplemental Indenture between Saratoga Investment Corp. and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as trustee, relating to the 8.50% Notes due 2028 (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on April 14, 2023).

 
 
 

4.15
 
Form of 7.75% Notes due 2025 (incorporated by reference to Exhibit 4.6 hereto).

 
 
 

4.16
 
Form of 6.25% Notes due 2027 (incorporated by reference to Exhibit 4.7 hereto).

 
 
 

4.17
 
Form of 4.375% Notes due 2026 (incorporated by reference to Exhibit 4.8 hereto).

 
 
 

4.18
 
Form of 4.35% Notes due 2027 (incorporated by reference to Exhibit 4.9 hereto).

 
 
 

4.19
 
Form of 6.00% Notes due 2027 (incorporated by reference to Exhibit 4.10 hereto).

 
 
 

4.20
 
Form of 7.00% Notes due 2027 (incorporated by reference to Exhibit 4.11 hereto).

 
 
 

4.21
 
Form of 8.00% Notes due 2027 (incorporated by reference to Exhibit 4.12 hereto).

 
 
 

4.22
 
Form of 8.125% Notes due 2027 (incorporated by reference to Exhibit 4.13 hereto).

 
 
 

4.23
 
Form of 8.50% Notes due 2028 (incorporated by reference to Exhibit 4.14 hereto).

 
 
 

4.24
 
Description of Securities (incorporated by reference to Saratoga Investment Corp.’s Annual Report on Form 10-K filed on May 2, 2023).

 
 
 

10.1
 
Investment Advisory and Management Agreement dated July 30, 2010 between GSC Investment Corp. and Saratoga Investment Advisors, LLC (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on August 3, 2010).

 
 
 

10.2
 
Custodian Agreement dated March 21, 2007 between GSC Investment LLC and U.S. Bank National Association (incorporated by reference to Saratoga Investment Corp.’s Form 10-Q for the quarterly period ended May 31, 2007).

 
 
 

10.3
 
Administration Agreement dated July 30, 2010 between GSC Investment Corp. and Saratoga Investment Advisors, LLC (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on August 3, 2010).

 
 
 

10.4
 
Trademark License Agreement dated July 30, 2010 between Saratoga Investment Advisors, LLC and GSC Investment Corp. (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on August 3, 2010).

 
 
 

10.5
 
Form of Indemnification Agreement between Saratoga Investment Corp. and each officer and director of Saratoga Investment Corp. (incorporated by reference to Amendment No. 2 to Saratoga Investment Corp.’s Registration Statement on Form N-2 filed on January 12, 2007).

 
 
 

10.6
 
Amended and Restated Indenture, dated as of November 15, 2016, among Saratoga Investment Corp. CLO 2013-1, Ltd., Saratoga Investment Corp. CLO 2013-1, Inc. and U.S. Bank National Association. (incorporated by reference to Saratoga Investment Corp.’s Registration Statement on Form N-2, File No. 333-216344, filed on February 28, 2017).

 
 
 

10.7
 
Amended and Restated Collateral Management Agreement, dated February 26, 2021, by and between Saratoga Investment Corp. and Saratoga Investment Corp. CLO 2013-1, Ltd. (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on March 4, 2021).

 
 
 

10.8
 
Amended and Restated Collateral Administration Agreement, dated February 26, 2021, by and between Saratoga Investment Corp., Saratoga Investment Corp. CLO 2013-1, Ltd. and U.S. Bank National Association (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on March 4, 2021).

 
 
 

10.9
 
Equity Distribution Agreement, dated
    July 30, 2021, by and among Saratoga Investment Corp. and Saratoga Investment Advisors, LLC, on the one hand, and Ladenburg Thalmann &
    Co. Inc. and Compass Point Research & Trading, LLC, on the other hand (incorporated by reference to Saratoga Investment Corp.’s
    Current Report on Form 8-K filed on August 2, 2021).

 


125
 

 


10.10
 
Amendment No. 2 to the Equity Distribution Agreement,
    dated July 30, 2021, by and among Saratoga Investment Corp. and Saratoga Investment Advisors, LLC, on the one hand, and Ladenburg
    Thalmann & Co. Inc. and Compass Point Research & Trading, LLC, on the other hand (incorporated by reference to Saratoga Investment
    Corp.’s Current Report on Form 8-K filed on July 10, 2023).

 
 
 

10.11
 
Amendment No. 3 to the Equity Distribution Agreement,
    dated July 30, 2021, by and among Saratoga Investment Corp. and Saratoga Investment Advisors, LLC, on the one hand, and Ladenburg
    Thalmann & Co. Inc., Compass Point Research and Trading, LLC, and Raymond James & Associates, Inc. on the other hand (incorporated
    by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on July 19, 2023). 

 
 
 

10.12
 
Credit and Security Agreement, dated as of October
    4, 2021, by and among Saratoga Investment Funding II, LLC, Saratoga Investment Corp., as collateral manager and equityholder, the
    lenders party thereto, Encina Lender Finance, LLC, as administrative agent for the secured parties and the collateral agent, and
    U.S. Bank National Association, as collateral custodian for the secured parties thereto and as collateral administrator (incorporated
    by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on October 7, 2021).

 
 
 

10.13
 
First Amendment to the Credit and Security Agreement,
    dated as of January 27, 2023, by and among Saratoga Investment Fund II LLC, as borrower, Saratoga Investment Corp., as equityholder
    and as collateral manager, the lenders party thereto, Encina Lender Finance, LLC, as administrative agent and as collateral agent,
    U.S. Bank National Association, as custodian, and U.S. Bank Trust Company, National Association (successor in interest to U.S. Bank
    National Association), as collateral administrator (incorporated by reference to Saratoga Investment Corp.’s Current Report
    on Form 8-K, filed on February 2, 2023).

 
 
 

10.14
 
Equity Pledge Agreement, dated as of October 4, 2021,
    by and between Saratoga Investment Corp. and Encina Lender Finance, LLC, as collateral agent for the secured parties thereto (incorporated
    by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on October 7, 2021).

 
 
 

10.15
 
Loan Sale and Contribution Agreement, dated as of October
    4, 2021, by and between Saratoga Investment Corp., as seller, and Saratoga Investment Funding II LLC, as purchaser (incorporated
    by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on October 7, 2021).

 
 
 

10.16
 
Credit and Security Agreement, dated as of March 27, 2024, by and among Saratoga Investment Funding III, LLC, as borrower, Saratoga Investment Corp., as collateral manager and equityholder, the lenders from time to time party thereto, Live Oak Banking Company, as administrative agent and collateral agent, U.S. Bank National Association, as custodian, and U.S. Bank Trust Company, National Association, as collateral administrator (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on March 28, 2024). 

 
 
 

10.17
 
Equity Pledge Agreement, dated as of March 27, 2024, by and between Saratoga Investment Corp., as pledgor, and Live Oak Banking Company, as collateral agent for the benefit of the secured parties (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on March 28, 2024). 

 
 
 

10.18
 
Loan Sale and Contribution Agreement, dated as of March 27, 2024, by and between Saratoga Investment Corp., as seller, and Saratoga Investment Funding III LLC, as purchaser (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on March 28, 2024). 

 
 
 

10.19
 
Saratoga Senior Loan Fund
    I JV LLC Limited Liability Company Agreement, dated October 26, 2021, by and between Saratoga Investment Corp. and TJHA JV I LLC
    (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on October 27, 2021).

 
 
 

10.20
 
Note Purchase Agreement by and between Saratoga Investment
    Corp. and the purchaser party thereto, dated July 9, 2020 (incorporated by reference to Saratoga Investment Corp.’s Quarterly
    Report on Form 10-Q filed on October 4, 2022).

 
 
 

10.21
 
First Supplemental Note Purchase Agreement by and between
    Saratoga Investment Corp. and the purchaser party thereto, dated January 28, 2021 (incorporated by reference to Saratoga Investment
    Corp.’s Quarterly Report on Form 10-Q filed on October 4, 2022).

 


126
 

 


10.22
 
Second Supplemental Note Purchase Agreement by and
    between Saratoga Investment Corp. and the purchaser party thereto, dated September 8, 2022 (incorporated by reference to Saratoga
    Investment Corp.’s Quarterly Report on Form 10-Q filed on October 4, 2022).

 
 
 

14
 
Code of Ethics of the Company adopted under Rule 17j-1
    (incorporated by reference to Amendment No.7 to Saratoga Investment Corp.’s Registration Statement on Form N-2, File No. 333-138051,
    filed on March 22, 2007).

 
 
 

19*
 
Insider Trading Policies and Procedures.

 
 
 

21*
 
List of Subsidiaries.

 
 
 

23.1*
 
Consent of Ernst & Young LLP for Saratoga Investment Corp. 

 
 
 

23.2*
 
Consent of CohnReznick LLP for Saratoga Investment Corp. CLO 2013-1, Ltd.

 
 
 

31.1*
 
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

 
 
 

31.2*
 
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

 
 
 

32.1*
 
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.1350)

 
 
 

32.2*
 
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

 
 
 

97.1*
 
Compensation Recoupment Policy.

 
 
 

101.INS
 
Inline XBRL Instance Document.

 
 
 

101.SCH
 
Inline XBRL Taxonomy Extension Schema Document.

 
 
 

101.CAL
 
Inline XBRL Taxonomy Extension Calculation Linkbase Document.

 
 
 

101.DEF
 
Inline XBRL Taxonomy Extension Definition Linkbase Document.

 
 
 

101.LAB
 
Inline XBRL Taxonomy Extension Label Linkbase Document.

 
 
 

101.PRE
 
Inline XBRL Taxonomy Extension Presentation Linkbase Document.

 
 
 

104
 
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 
 


*Filed
herewith

 
ITEM 16. FORM 10-K SUMMARY
 
None.


127
 

 
SIGNATURES
 
Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
 


 
SARATOGA INVESTMENT CORP.

 
 
 

Date: May 6, 2024
By:
/s/ CHRISTIAN L. OBERBECK 

 
 
Christian L. Oberbeck

 
 
Chief Executive Officer

 
 
 

 
By:
/s/ HENRI J. STEENKAMP

 
 
Henri J. Steenkamp

 
 
Chief Financial Officer and Chief Compliance Officer

 
KNOW ALL PERSONS BY THESE PRESENT, that each person
whose signature appears below hereby constitutes and appoints Christian L. Oberbeck and Henri J. Steenkamp, and each of them (with full
power to each of them to act alone), his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution,
for him and in his name, place, and stead, in any and all capacities, to sign this report and any and all amendments thereto, and to file
the same, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
 
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
 


Signature
 
Title
 
Date

 
 
 
 
 

/s/ CHRISTIAN L. OBERBECK
 
Chairman of the Board of Directors, Chief Executive Officer
 
May 6, 2024

Christian L. Oberbeck
 
 (Principal Executive Officer)
 
 

 
 
 
 
 

/s/ HENRI J. STEENKAMP
 
Chief Financial Officer (Principal Accounting Officer and
 
May 6, 2024

Henri J. Steenkamp
 
Principal Financial Officer), Member of the Board of Directors
 
 

 
 
 
 
 

/s/ STEVEN M. LOONEY
 
Member of the Board of Directors
 
May 6, 2024

Steven M. Looney
 
 
 
 

 
 
 
 
 

/s/ CHARLES S. WHITMAN III
 
Member of the Board of Directors
 
May 6, 2024

Charles  S. Whitman III
 
 
 
 

 
 
 
 
 

/s/ G. CABELL WILLIAMS
 
Member of the Board of Directors
 
May 6, 2024

Cabell Williams
 
 
 
 

 


128
 

 
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
      PAGE  Reports of Independent Registered Public Accounting Firm (PCAOB No. 00042)   F-2  Consolidated Statements of Assets and Liabilities as of February 29, 2024 and February 28, 2023   F-4  Consolidated Statements of Operations for the years ended February 29, 2024, February 28, 2023 and February 28, 2022   F-5  Consolidated Statements of Changes in Net Assets for the years ended February 29, 2024, February 28, 2023 and February 28, 2022   F-6  Consolidated Statements of Cash Flows for the years ended February 29, 2024, February 28, 2023 and February 28, 2022   F-7  Consolidated Schedules of Investments for the year ended February 29, 2024 and February 28, 2023   F-8  Notes to Consolidated Financial Statements   F-32 
 


F-1
 

 
Report of Independent Registered Public Accounting
Firm 
 
To the Shareholders and the Board of Directors of Saratoga Investment
Corp.
 
Opinion on the Financial Statements
 
We have audited the accompanying consolidated statements of assets
and liabilities of Saratoga Investment Corp. (the “Company”), including the consolidated schedules of investments, as of February
29, 2024 and February 28, 2023, the related consolidated statements of operations, changes in net assets, and cash flows for each of the
three years in the period ended February 29, 2024, and the related notes (collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position
of the Company at February 29, 2024 and February 28, 2023, and the results of its operations, changes in its net assets and its cash flows
for each of the three years in the period ended February 29, 2024, in conformity with U.S. generally accepted accounting principles.
 
Basis for Opinion
 
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
 
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal
control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal
control over financial reporting. Accordingly, we express no such opinion.
 
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures
included confirmation of investments owned as of February 29, 2024 and February 28, 2023 by correspondence with the portfolio companies,
custodians and debt agents. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
our opinion.
 
Critical Audit Matter
 
The critical audit matter communicated below is a matter arising
from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee
and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion
on the critical audit matter or on the account or disclosure to which is relates.
 


F-2
 

 
Valuation of investments using significant unobservable inputs
 


Description
    of the Matter
 
At February
                                            29, 2024, the fair value of the Company's investments categorized in Level 3 of the fair
                                            value hierarchy (Level 3 investments) totaled $1,129,390 (in thousands). Management determines
                                            the fair value of these investments by applying the valuation techniques described in Notes
                                            2 and 3 to the consolidated financial statements and using significant unobservable inputs
                                            and assumptions. The selection of the valuation techniques and the significant unobservable
                                            inputs and assumptions used by management requires subjective judgments and estimates. The
                                            valuation techniques used by the Company include market comparables, discounted cash flows
                                            and enterprise value waterfalls. The significant unobservable inputs used to measure fair
                                            value include market yields, EBITDA multiples, revenue multiples, third-party bids, discount
                                            rates, recovery rates and prepayment rates.
 
Auditing
the fair value of the Company's Level 3 investments was complex and involved auditor judgment, as the valuation techniques selected and
the significant unobservable inputs and assumptions used by the Company are highly judgmental and require estimation, and the selection
of such techniques, inputs and assumptions has a significant effect on the fair value measurement of such investments.

 
 
 

How
    We Addressed the Matter in Our Audit
 
To test the valuation of the Company’s Level
    3 investments, we gained an understanding of the valuation techniques, significant unobservable inputs and assumptions used by the
    Company to value the Level 3 investments and reviewed the information considered by the Board of Directors relating to the fair value
    of each investment. For a sample of Level 3 investments, we evaluated the valuation techniques used, tested the significant unobservable
    inputs and assumptions, and tested the mathematical accuracy of the related valuation models. For this sample of Level 3 investments,
    we agreed the significant inputs and underlying data used in the Company’s valuations (for example, deal terms, portfolio company
    operating results, market yields, third-party bids) to transaction agreements, most recently available portfolio company financial
    statements or other financial information, information available from third-party sources and market data, as applicable. We involved
    our valuation specialists to assist in developing independent estimates of fair value for a sample of investments by using portfolio
    company and market information, and we compared such estimates to the Company’s fair value of these investments. We also searched
    for and evaluated information that corroborated or contradicted the Company’s valuations of Level 3 investments. 
 
/s/ Ernst & Young LLP
 
We have served as the Company’s auditor since 2006.
 
New York, New York
May 6, 2024
 


F-3
 

 
PART I. FINANCIAL INFORMATION
 
Item 1. Consolidated Financial Statements
 
Saratoga Investment Corp.
Consolidated Statements of Assets and Liabilities
 


  
February 29, 2024  
February 28, 2023 

ASSETS 
   
  

Investments at fair value 
   
  

Non-control/Non-affiliate investments (amortized cost of $1,035,879,751 and $819,966,208, respectively) 
$1,019,774,616  
$828,028,800 

Affiliate investments (amortized cost of $26,707,415 and $25,722,320, respectively) 
 27,749,137  
 28,305,871 

Control investments (amortized cost of $117,196,571 and $120,800,829, respectively) 
 91,270,036  
 116,255,582 

Total investments at fair value (amortized cost of $1,179,783,737 and $966,489,357, respectively) 
 1,138,793,789  
 972,590,253 

Cash and cash equivalents 
 8,692,846  
 65,746,494 

Cash and cash equivalents, reserve accounts 
 31,814,278  
 30,329,779 

Interest receivable (net of reserve of $9,490,340 and $2,217,300, respectively) 
 10,298,998  
 8,159,951 

Management fee receivable 
 343,023  
 363,809 

Other assets 
 1,163,225  
 531,337 

Current tax receivable 
 99,676  
 436,551 

Total assets 
$1,191,205,835  
$1,078,158,174 

  
    
   

LIABILITIES 
    
   

Revolving credit facility 
$35,000,000  
$32,500,000 

Deferred debt financing costs, revolving credit facility 
 (882,122) 
 (1,344,005)

SBA debentures payable 
 214,000,000  
 202,000,000 

Deferred debt financing costs, SBA debentures payable 
 (5,779,892) 
 (4,923,488)

8.75% Notes Payable 2025 
 20,000,000  
 - 

Discount on 8.75% notes payable 2025 
 (112,894) 
 - 

Deferred debt financing costs, 8.75% notes payable 2025 
 (4,777) 
 - 

7.00% Notes Payable 2025 
 12,000,000  
 12,000,000 

Discount on 7.00% notes payable 2025 
 (193,175) 
 (304,946)

Deferred debt financing costs, 7.00% notes payable 2025 
 (24,210) 
 (40,118)

7.75% Notes Payable 2025 
 5,000,000  
 5,000,000 

Deferred debt financing costs, 7.75% notes payable 2025 
 (74,531) 
 (129,528)

4.375% Notes Payable 2026 
 175,000,000  
 175,000,000 

Premium on 4.375% notes payable 2026 
 564,260  
 830,824 

Deferred debt financing costs, 4.375% notes payable 2026 
 (1,708,104) 
 (2,552,924)

4.35% Notes Payable 2027 
 75,000,000  
 75,000,000 

Discount on 4.35% notes payable 2027 
 (313,010) 
 (408,932)

Deferred debt financing costs, 4.35% notes payable 2027 
 (1,033,178) 
 (1,378,515)

6.25% Notes Payable 2027 
 15,000,000  
 15,000,000 

Deferred debt financing costs, 6.25% notes payable 2027 
 (273,449) 
 (344,949)

6.00% Notes Payable 2027 
 105,500,000  
 105,500,000 

Discount on 6.00% notes payable 2027 
 (123,782) 
 (159,334)

Deferred debt financing costs, 6.00% notes payable 2027 
 (2,224,403) 
 (2,926,637)

8.00% Notes Payable 2027 
 46,000,000  
 46,000,000 

Deferred debt financing costs, 8.00% notes payable 2027 
 (1,274,455) 
 (1,622,376)

8.125% Notes Payable 2027 
 60,375,000  
 60,375,000 

Deferred debt financing costs, 8.125% notes payable 2027 
 (1,563,594) 
 (1,944,536)

8.50% Notes Payable 2028 
 57,500,000  
 - 

Deferred debt financing costs, 8.50% notes payable 2028 
 (1,680,039) 
 - 

Base management and incentive fees payable 
 8,147,217  
 12,114,878 

Deferred tax liability 
 3,791,150  
 2,816,572 

Accounts payable and accrued expenses 
 1,337,542  
 1,464,343 

Interest and debt fees payable 
 3,582,173  
 3,652,936 

Directors fees payable 
 -  
 14,932 

Due to Manager 
 450,000  
 10,935 

Total liabilities 
 820,981,727  
 731,200,132 

  
    
   

Commitments and contingencies (See Note 9) 
    
   

  
    
   

NET ASSETS 
    
   

Common stock, par value $0.001, 100,000,000 common shares authorized, 13,653,476 and 11,890,500 common shares issued and outstanding, respectively 
 13,654  
 11,891 

Capital in excess of par value 
 371,081,199  
 321,893,806 

Total distributable earnings (deficit) 
 (870,745) 
 25,052,345 

Total net assets 
 370,224,108  
 346,958,042 

Total liabilities and net assets 
$1,191,205,835  
$1,078,158,174 

NET ASSET VALUE PER SHARE 
$27.12  
$29.18 

 
See accompanying notes to consolidated financial
statements.


F-4
 

 
Saratoga Investment
Corp.
Consolidated
Statements of Operations
 


  
For the year ended 

  
February 29,  2024  
February 28,  2023  
February 28,  2022 

INVESTMENT INCOME 
   
   
  

Interest from investments 
   
   
  

Interest income: 
   
   
  

Non-control/Non-affiliate investments 
$113,521,652  
$72,677,237  
$46,369,544 

Affiliate investments 
 3,299,816  
 4,773,527  
 3,308,471 

Control investments 
 8,507,909  
 6,602,594  
 7,345,691 

Payment-in-kind interest income: 
    
    
   

Non-control/Non-affiliate investments 
 766,697  
 359,910  
 1,150,695 

Affiliate investments 
 874,226  
 416,711  
 - 

Control investments 
 814,925  
 386,889  
 327,171 

Total interest from investments 
 127,785,225  
 85,216,868  
 58,501,572 

Interest from cash and cash equivalents 
 2,512,416  
 1,368,489  
 3,584 

Management fee income 
 3,270,232  
 3,269,820  
 3,262,591 

Dividend income(*): 
    
    
   

Non-control/Non-affiliate investments 
 621,398  
 2,104,355  
 1,379,182 

Affiliate investments 
 -  
 615,917  
 546,609 

Control investments 
 5,911,564  
 -  
 - 

Total dividend from investments 
 6,532,962  
 2,720,272  
 1,925,791 

Structuring and advisory fee income 
 2,149,751  
 3,585,061  
 4,307,647 

Other income 
 1,469,320  
 2,943,610  
 2,739,372 

Total investment income 
 143,719,906  
 99,104,120  
 70,740,557 

  
    
    
   

OPERATING EXPENSES 
    
    
   

Interest and debt financing expenses 
 49,179,899  
 33,498,489  
 19,880,693 

Base management fees 
 19,212,337  
 16,423,960  
 11,901,729 

Incentive management fees expense (benefit) 
 8,025,468  
 5,057,117  
 11,794,208 

Professional fees 
 1,767,015  
 1,812,259  
 1,378,134 

Administrator expenses 
 3,872,917  
 3,160,417  
 2,906,250 

Insurance 
 322,323  
 347,483  
 348,671 

Directors fees and expenses 
 351,297  
 360,000  
 335,596 

General and administrative 
 2,241,579  
 2,328,672  
 1,661,932 

Income tax expense (benefit) 
 42,926  
 (152,956) 
 (39,649)

Excise tax expense (benefit) 
 1,829,837  
 1,067,532  
 630,183 

Total operating expenses 
 86,845,598  
 63,902,973  
 50,797,747 

NET INVESTMENT INCOME 
 56,874,308  
 35,201,147  
 19,942,810 

  
    
    
   

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 
    
    
   

Net realized gain (loss) from investments: 
    
    
   

Non-control/Non-affiliate investments 
 153,583  
 7,446,596  
 6,209,737 

Affiliate investments 
 -  
 -  
 7,328,457 

Control investments 
 -  
 -  
 (139,867)

Net realized gain (loss) from investments 
 153,583  
 7,446,596  
 13,398,327 

Income tax (provision) benefit from realized gain on investments 
 -  
 548,568  
 (2,886,444)

Net change in unrealized appreciation (depreciation) on investments: 
    
    
   

Non-control/Non-affiliate investments 
 (24,167,727) 
 (5,330,880) 
 14,775,190 

Affiliate investments 
 (1,541,829) 
 574,354  
 (26,836)

Control investments 
 (21,381,288) 
 (10,461,606) 
 2,271,639 

Net change in unrealized appreciation (depreciation) on investments 
 (47,090,844) 
 (15,218,132) 
 17,019,993 

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments 
 (893,166) 
 (1,715,333) 
 694,908 

Net realized and unrealized gain (loss) on investments 
 (47,830,427) 
 (8,938,301) 
 28,226,784 

Realized losses on extinguishment of debt 
 (110,056) 
 (1,587,083) 
 (2,434,410)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 
$8,933,825  
$24,675,763  
$45,735,184 

  
    
    
   

WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE 
$0.71  
$2.06  
$3.99 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED 
 12,670,939  
 11,963,533  
 11,456,631 

 
 


*Certain prior period amounts have been reclassified to conform to current year presentation.

 
See
accompanying notes to consolidated financial statements.


F-5
 

 
Saratoga Investment
Corp.
Consolidated
Statements of Changes in Net Assets
 


  
For the year ended 

  
February 29,  2024  
February 28,  2023  
February 28,  2022 

INCREASE (DECREASE) FROM OPERATIONS: 
   
   
  

Net investment income 
$56,874,308  
$35,201,147  
$19,942,810 

Net realized gain from investments 
 153,583  
 7,446,596  
 13,398,327 

Realized losses on extinguishment of debt 
 (110,056) 
 (1,587,083) 
 (2,434,410)

Income tax (provision) benefit from realized gain on investments 
 -  
 548,568  
 (2,886,444)

Net change in unrealized appreciation (depreciation) on investments 
 (47,090,844) 
 (15,218,132) 
 17,019,993 

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments 
 (893,166) 
 (1,715,333) 
 694,908 

Net increase in net assets resulting from operations 
 8,933,825  
 24,675,763  
 45,735,184 

  
    
    
   

DECREASE FROM SHAREHOLDER DISTRIBUTIONS: 
    
    
   

Total distributions to shareholders 
 (35,635,955) 
 (27,313,402) 
 (22,033,235)

Net decrease in net assets from shareholder distributions 
 (35,635,955) 
 (27,313,402) 
 (22,033,235)

  
    
    
   

CAPITAL SHARE TRANSACTIONS: 
    
    
   

Proceeds from issuance of common stock(1) 
 44,539,387  
 -  
 26,835,203 

Capital contribution from Manager 
 4,475,297  
 -  
 - 

Stock dividend distribution 
 3,582,345  
 4,648,262  
 3,875,206 

Repurchases of common stock 
 (2,157,605) 
 (10,824,340) 
 (2,545,037)

Repurchase fees 
 (1,772) 
 (8,764) 
 (1,992)

Offering costs 
 (469,456) 
 -  
 (270,576)

Net increase (decrease) in net assets from capital share transactions 
 49,968,196  
 (6,184,842) 
 27,892,804 

Total increase (decrease) in net assets 
 23,266,066  
 (8,822,481) 
 51,594,753 

Net assets at beginning of year 
 346,958,042  
 355,780,523  
 304,185,770 

Net assets at end of year 
$370,224,108  
$346,958,042  
$355,780,523 

 
 


(1)See Note 11 to the Consolidated
Financial Statements contained herein for more information on share issuance.

 
See accompanying
notes to consolidated financial statements.
 


F-6
 

 
Saratoga Investment
Corp.
Consolidated
Statements of Cash Flows
 


  
For the year ended 

  
February 29,  2024  
February 28,  2023  
February 28,  2022 

Operating activities 
   
   
  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 
$8,933,825  
$24,675,763  
$45,735,184 

ADJUSTMENTS TO RECONCILE NET INCREASE (DECREASE) IN NET ASSETS RESULTING 
    
    
   

FROM OPERATIONS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: 
    
    
   

Payment-in-kind and other adjustments to cost 
 4,910,320  
 1,882,734  
 349,292 

Net accretion of discount on investments 
 (2,221,257) 
 (1,816,934) 
 (2,043,088)

Amortization of deferred debt financing costs 
 5,171,249  
 3,587,139  
 2,164,761 

Realized losses on extinguishment of debt 
 110,056  
 1,587,083  
 2,434,410 

Income tax expense (benefit) 
 42,926  
 (152,956) 
 21,260 

Net realized (gain) loss from investments 
 (153,583) 
 (7,446,596) 
 (13,398,327)

Net change in unrealized (appreciation) depreciation on investments 
 47,090,844  
 15,218,132  
 (17,019,993)

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments 
 893,166  
 1,715,333  
 (694,908)

Proceeds from sales and repayments of investments 
 30,271,047  
 222,215,062  
 226,931,104 

Purchases of investments 
 (246,100,906) 
 (385,075,296) 
 (458,073,629)

(Increase) decrease in operating assets: 
    
    
   

Interest receivable 
 (2,139,047) 
 (3,066,390) 
 (869,931)

Due from affiliate 
 -  
 90,968  
 2,628,032 

Management fee receivable 
 20,786  
 (1,260) 
 (327,905)

Other assets 
 (631,887) 
 (276,357) 
 692,335 

Current income tax receivable 
 336,875  
 (436,551) 
 - 

Increase (decrease) in operating liabilities: 
    
    
   

Base management and incentive fees payable 
 (3,967,661) 
 (832,147) 
 6,390,351 

Accounts payable and accrued expenses 
 (126,801) 
 665,285  
 (951,208)

Current tax payable 
 -  
 (2,820,036) 
 2,820,036 

Interest and debt fees payable 
 (70,763) 
 851,315  
 155,837 

Directors fees payable 
 (14,932) 
 (55,068) 
 (500)

Excise tax payable 
 -  
 (630,183) 
 (61,489)

Due to Manager 
 439,065  
 (252,879) 
 (15,251)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 
 (157,206,679) 
 (130,373,839) 
 (203,133,627)

  
    
    
   

Financing activities 
    
    
   

Borrowings on debt 
 71,500,000  
 113,000,000  
 135,000,000 

Paydowns on debt 
 (57,000,000) 
 (76,000,000) 
 (95,500,000)

Issuance of notes 
 77,500,000  
 223,875,000  
 250,000,000 

Repayments of notes 
 -  
 (43,125,000) 
 (60,000,000)

Payments of deferred debt financing costs 
 (4,694,711) 
 (10,135,986) 
 (10,008,424)

Discount on debt issuance, 6.00% notes 2027 
 -  
 (176,000) 
 - 

Discount on debt issuance, 7.00% notes 2025 
 -  
 (360,000) 
 - 

Premium on debt issuance, 4.375% notes 2026 
 -  
 -  
 1,250,000 

Discount on debt issuance, 4.35% notes 2027 
 -  
 -  
 (512,250)

Proceeds from issuance of common stock 
 44,539,387  
 -  
 26,835,203 

Capital contribution from Manager 
 4,475,297  
 -  
 - 

Payments of cash dividends 
 (32,053,610) 
 (22,665,140) 
 (18,158,029)

Repurchases of common stock 
 (2,157,605) 
 (10,824,340) 
 (2,545,037)

Repurchases fees 
 (1,772) 
 (8,764) 
 (1,992)

Payments of offering costs 
 (469,456) 
 -  
 (270,576)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 
 101,637,530  
 173,579,770  
 226,088,895 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS 
 (55,569,149) 
 43,205,931  
 22,955,268 

CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS, BEGINNING OF YEAR 
 96,076,273  
 52,870,342  
 29,915,074 

CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS, END OF YEAR (See Note 2) 
$40,507,124  
$96,076,273  
$52,870,342 

  
    
    
   

Supplemental information: 
    
    
   

Interest paid during the year 
$44,079,413  
$28,904,198  
$17,560,094 

Cash paid for taxes 
 748,721  
 2,770,984  
 1,355,083 

Supplemental non-cash information: 
    
    
   

Payment-in-kind interest income and other adjustments to cost 
 (4,910,319) 
 (1,882,734) 
 (349,292)

Net accretion of discount on investments 
 2,221,257  
 1,816,934  
 2,043,088 

Amortization of deferred debt financing costs 
 5,171,249  
 3,587,139  
 2,164,761 

Stock dividend distribution 
 3,582,345  
 4,648,262  
 3,875,206 

 
See
accompanying notes to consolidated financial statements.


F-7
 

 
Saratoga Investment
Corp.
Consolidated
Schedule of Investments
February 29,
2024
 





Company(1) 
Industry 
Investment Interest Rate/ Maturity 
Original
 Acquisition
 Date 
Principal/ Number of Shares  
Cost  
Fair Value (c)  
% of Net Assets 

Non-control/Non-affiliate investments - 276.5% (b) 
  
  
  
    
    
    
   

Altvia MidCo, LLC. 
Alternative Investment Management Software 
First Lien Term Loan (3M USD TERM SOFR+8.50%), 13.83% Cash, 7/18/2027 
7/18/2022 
$7,900,000  
$7,840,328  
$7,884,990  
 2.1%

Altvia MidCo, LLC. (h) 
Alternative Investment Management Software 
Series A-1 Preferred Shares 
7/18/2022 
 2,000,000  
 2,000,000  
 2,894,346  
 0.8%

  
  
Total Alternative Investment Management Software 
  
    
 9,840,328  
 10,779,336  
 2.9%

BQE Software, Inc. 
Architecture & Engineering Software 
First Lien Term Loan (3M USD TERM SOFR+6.75%), 12.08% Cash, 4/13/2028 
4/13/2023 
$24,500,000  
 24,285,669  
 24,497,550  
 6.6%

BQE Software, Inc. (j) 
Architecture & Engineering Software 
Delayed Draw Term Loan (3M USD TERM SOFR+6.75%), 12.08% Cash, 4/13/2028 
4/13/2023 
$750,000  
 743,481  
 749,925  
 0.2%

  
  
Total Architecture & Engineering Software 
  
    
 25,029,150  
 25,247,475  
 6.8%

GrowthZone, LLC 
Association Management Software 
First Lien Term Loan (3M USD TERM SOFR+8.25%), 13.58% Cash, 5/10/2028 
5/10/2023 
$22,649,425  
 22,292,083  
 22,934,808  
 6.2%

Golden TopCo LP (h) 
Association Management Software 
Class A-2 Common Units 
5/10/2023 
 1,072,394  
 1,072,394  
 1,154,132  
 0.3%

  
  
Total Association Management Software 
  
    
 23,364,477  
 24,088,940  
 6.5%

  


F-8
 

 Saratoga Investment
Corp.
Consolidated
Schedule of Investments
February 29,
2024
 


Company(1) 
Industry 
Investment Interest Rate/ Maturity 
Original
 Acquisition
 Date 
Principal/ Number of Shares  
Cost  
Fair Value (c)  
% of Net Assets 

Artemis Wax Corp. (d)(j) 
Consumer Services 
Delayed Draw Term Loan (1M USD TERM SOFR+6.75%), 12.07% Cash, 5/20/2026 
5/20/2021 
$57,500,000  
 57,208,255  
 58,149,750  
 15.7%

Artemis Wax Corp. (h) 
Consumer Services 
Series B-1 Preferred Stock 
5/20/2021 
 934,463  
 1,500,000  
 4,822,941  
 1.3%

Artemis Wax Corp. (h) 
Consumer Services 
Series D Preferred Stock 
12/22/2022 
 290,595  
 1,500,000  
 1,716,380  
 0.5%

  
  
Total Consumer Services 
  
    
 60,208,255  
 64,689,071  
 17.5%

Schoox, Inc. (h), (i) 
Corporate Education Software 
Series 1 Membership Interest 
12/8/2020 
 1,050  
 475,698  
 4,426,630  
 1.2%

  
  
Total Corporate Education Software 
  
    
 475,698  
 4,426,630  
 1.2%

GreyHeller LLC (h) 
Cyber Security 
Common Stock 
11/10/2021 
 7,857,689  
 1,906,275  
 2,826,009  
 0.8%

  
  
Total Cyber Security 
  
    
 1,906,275  
 2,826,009  
 0.8%

Gen4 Dental Partners Holdings, LLC 
Dental Practice Management 
Delayed Draw Term Loan (3M USD TERM SOFR+10.22%), 15.55% Cash, 4/29/2026 
2/8/2023 
$11,000,000  
 10,979,958  
 11,110,000  
 3.0%

Gen4 Dental Partners Holdings, LLC (h)(i) 
Dental Practice Management 
Series A Preferred Units 
2/8/2023 
 493,999  
 1,027,519  
 1,111,499  
 0.3%

Modis Dental Partners OpCo, LLC 
Dental Practice Management 
First Lien Term Loan (1M USD TERM SOFR+9.48%), 14.80% Cash, 4/18/2028 
4/18/2023 
$7,000,000  
 6,906,453  
 7,113,400  
 1.9%

Modis Dental Partners OpCo, LLC 
Dental Practice Management 
Delayed Draw Term Loan (1M USD TERM SOFR+9.48%), 14.80% Cash, 4/18/2028 
4/18/2023 
$7,500,000  
 7,392,367  
 7,621,500  
 2.1%

Modis Dental Partners OpCo, LLC (h) 
Dental Practice Management 
Class A Preferred Units 
4/18/2023 
 2,950,000  
 2,950,000  
 2,682,996  
 0.7%

New England Dental Partners 
Dental Practice Management 
First Lien Term Loan (3M USD TERM SOFR+8.00%), 13.48% Cash, 11/25/2025 
11/25/2020 
$6,555,000  
 6,526,643  
 6,198,408  
 1.7%

New England Dental Partners 
Dental Practice Management 
Delayed Draw Term Loan (3M USD TERM SOFR+8.00%), 13.48% Cash, 11/25/2025 
11/25/2020 
$4,650,000  
 4,635,903  
 4,397,040  
 1.2%

  
  
Total Dental Practice Management 
  
    
 40,418,843  
 40,234,843  
 10.9%

 


F-9
 

 Saratoga Investment
Corp.
Consolidated
Schedule of Investments
February 29,
2024
 


Company(1) 
Industry 
Investment Interest Rate/ Maturity 
Original
 Acquisition
 Date 
Principal/ Number of Shares  
Cost  
Fair Value (c)  
% of Net Assets 

Exigo, LLC (d) 
Direct Selling Software 
First Lien Term Loan (1M USD TERM SOFR+5.75%), 11.17% Cash, 3/16/2027 
3/16/2022 
$24,313,135  
 24,167,354  
 23,165,555  
 6.3%

Exigo, LLC (j) 
Direct Selling Software 
Revolving Credit Facility (1M USD TERM SOFR+5.75%), 11.17% Cash, 3/16/2027 
3/16/2022 
$-  
 -  
 (49,167) 
 0.0%

Exigo, LLC (h), (i) 
Direct Selling Software 
Common Units 
3/16/2022 
 1,041,667  
 1,041,667  
 957,067  
 0.3%

  
  
Total Direct Selling Software 
  
    
 25,209,021  
 24,073,455  
 6.6%

C2 Educational Systems, Inc. (d) 
Education Services 
First Lien Term Loan (3M USD TERM SOFR+8.50%), 13.83% Cash, 5/31/2025 
5/31/2017 
$21,500,000  
 21,478,821  
 21,459,150  
 5.8%

C2 Educational Systems, Inc. (j) 
Education Services 
Delayed Draw Term Loan (3M USD TERM SOFR+8.50%), 13.83% Cash, 5/31/2025 
4/28/2023 
$-  
 -  
 -  
 0.0%

C2 Education Systems, Inc. (h) 
Education Services 
Series A-1 Preferred Stock 
5/18/2021 
 3,127  
 499,904  
 576,118  
 0.2%

Zollege PBC (k) 
Education Services 
First Lien Term Loan (3M USD TERM SOFR+7.00%), 12.33% Cash/2.00% PIK, 5/11/2026 
5/11/2021 
$16,409,153  
 16,340,466  
 3,493,509  
 0.9%

Zollege PBC (j)(k) 
Education Services 
Delayed Draw Term Loan (3M USD TERM SOFR+7.00%), 12.33% Cash/2.00% PIK, 5/11/2026 
5/11/2021 
$1,364,109  
 1,358,200  
 290,419  
 0.1%

Zollege PBC (h) 
Education Services 
Class A Units 
5/11/2021 
 250,000  
 250,000  
 -  
 0.0%

  
  
Total Education Services 
  
    
 39,927,391  
 25,819,196  
 7.0%

Destiny Solutions Inc. (h)(i) 
Education Software 
Limited Partner Interests 
5/16/2018 
 3,068  
 3,969,291  
 9,894,736  
 2.7%

GoReact 
Education Software 
First Lien Term Loan (3M USD TERM SOFR+7.50%), 13.03% Cash/1.00% PIK, 1/17/2025 
1/17/2020 
$8,087,775  
 8,060,498  
 8,087,775  
 2.2%

GoReact (j) 
Education Software 
Delayed Draw Term Loan (3M USD TERM SOFR+7.50%), 13.03% Cash/1.00% PIK, 1/17/2025 
1/18/2022 
$-  
 -  
 -  
 0.0%

Identity Automation Systems (h) 
Education Software 
Common Stock Class A-2 Units 
8/25/2014 
 232,616  
 232,616  
 569,355  
 0.2%

Identity Automation Systems (h) 
Education Software 
Common Stock Class A-1 Units 
3/6/2020 
 43,715  
 171,571  
 235,296  
 0.1%

Ready Education 
Education Software 
First Lien Term Loan (3M USD TERM SOFR+7.00%), 12.33% Cash, 8/5/2027 
8/5/2022 
$27,000,000  
 26,797,063  
 26,792,100  
 7.2%

  
  
Total Education Software 
  
    
 39,231,039  
 45,579,262  
 12.4%

TG Pressure Washing Holdings, LLC (h) 
Facilities Maintenance 
Preferred Equity 
8/12/2019 
 488,148  
 488,148  
 231,181  
 0.1%

  
  
Total Facilities Maintenance 
  
    
 488,148  
 231,181  
 0.1%

 


F-10
 

 
Saratoga Investment
Corp.
Consolidated
Schedule of Investments
February 29,
2024
 


Company(1) 
Industry 
Investment Interest Rate/ Maturity 
Original
 Acquisition
 Date 
Principal/ Number of Shares  
Cost  
Fair Value (c)  
% of Net Assets 

Davisware, LLC 
Field Service Management 
First Lien Term Loan (3M USD TERM SOFR+7.00%), 12.33% Cash, 7/31/2024 
9/6/2019 
$6,000,000  
 5,991,382  
 5,989,200  
 1.6%

Davisware, LLC (j) 
Field Service Management 
Delayed Draw Term Loan  (3M USD TERM SOFR+7.00%), 12.33% Cash, 7/31/2024 
9/6/2019 
$4,727,790  
 4,714,256  
 4,719,280  
 1.3%

  
  
Total Field Service Management 
  
    
 10,705,638  
 10,708,480  
 2.9%

GDS Software Holdings, LLC 
Financial Services 
First Lien Term Loan  (3M USD TERM SOFR+7.00%), 12.33% Cash, 12/30/2026 
12/30/2021 
$22,713,926  
 22,624,322  
 22,545,843  
 6.1%

GDS Software Holdings, LLC 
Financial Services 
Delayed Draw Term Loan (3M USD TERM SOFR+7.00%), 12.33% Cash, 12/30/2026 
12/30/2021 
$3,286,074  
 3,262,111  
 3,261,757  
 0.9%

GDS Software
    Holdings, LLC (h) 
Financial Services 
Common Stock Class A Units 
8/23/2018 
 250,000  
 250,000  
 468,204  
 0.1%

  
  
Total Financial Services 
  
    
 26,136,433  
 26,275,804  
 7.1%

Ascend Software, LLC 
Financial Services Software 
First Lien Term Loan (3M USD TERM SOFR+7.50%), 13.10% Cash, 12/15/2026 
12/15/2021 
$6,000,000  
 5,961,680  
 5,920,200  
 1.6%

Ascend Software, LLC (j) 
Financial Services Software 
Delayed Draw Term Loan (3M USD TERM SOFR+7.50%), 13.10% Cash, 12/15/2026 
12/15/2021 
$4,050,000  
 4,029,154  
 3,996,135  
 1.1%

  
  
Total Financial Services Software 
  
    
 9,990,834  
 9,916,335  
 2.7%

Inspect Point Holdings, LLC 
Fire Inspection Business Software 
First Lien Term Loan  (1M USD TERM SOFR+6.50%), 11.82% Cash, 07/19/2028 
7/19/2023 
$10,000,000  
 9,908,861  
 9,916,000  
 2.7%

Inspect Point Holdings, LLC (j) 
Fire Inspection Business Software 
Delayed Draw Term Loan  (1M USD TERM SOFR+6.50%), 11.82% Cash, 07/19/2028 
7/19/2023 
$-  
 -  
 -  
 0.0%

  
  
Total Fire Inspection Business Software 
  
    
 9,908,861  
 9,916,000  
 2.7%

 


F-11
 

 
Saratoga Investment
Corp.
Consolidated
Schedule of Investments
February 29,
2024
 


Company(1) 
Industry 
Investment Interest Rate/ Maturity 
Original
 Acquisition
 Date 
Principal/ Number of Shares  
Cost  
Fair Value (c)  
% of Net Assets 

Stretch Zone Franchising, LLC 
Health/Fitness Franchisor 
First Lien Term Loan (3M USD TERM SOFR+7.00%), 12.33% Cash, 3/31/2028 
3/31/2023 
$30,000,000  
 29,740,931  
 29,970,000  
 8.1%

Stretch Zone Franchising, LLC (j) 
Health/Fitness Franchisor 
Delayed Draw Term Loan (3M USD TERM SOFR+7.00%), 12.33% Cash, 3/31/2028 
3/31/2023 
$-  
 -  
 -  
 0.0%

Stretch Zone Franchising, LLC (h) 
Health/Fitness Franchisor 
Class A Units 
3/31/2023 
 20,000  
 2,000,000  
 2,062,331  
 0.6%

  
  
Total Health/Fitness Franchisor 
  
    
 31,740,931  
 32,032,331  
 8.7%

Alpha Aesthetics Partners OpCo, LLC 
Healthcare Services 
First Lien Term Loan (1M USD TERM SOFR+9.98%), 15.30% Cash, 3/20/2028 
3/20/2023 
$3,900,000  
 3,847,845  
 3,959,670  
 1.2%

Alpha Aesthetics Partners OpCo, LLC (j) 
Healthcare Services 
Delayed Draw Term Loan (1M USD TERM SOFR+9.98%), 15.30% Cash, 3/20/2028 
3/20/2023 
$8,600,000  
 8,482,841  
 8,731,580  
 2.4%

Alpha Aesthetics Partners OpCo, LLC (h) 
Healthcare Services 
Class A Preferred Units 
3/20/2023 
 2,850,000  
 2,850,000  
 2,859,121  
 0.8%

Axiom Medical Consulting, LLC 
Healthcare Services 
First Lien Term Loan (3M USD TERM SOFR+6.00%), 11.33% Cash, 9/11/2028 
9/11/2023 
$10,000,000  
 9,917,367  
 9,913,000  
 2.7%

Axiom Medical Consulting, LLC (j) 
Healthcare Services 
Delayed Draw Term Loan (3M USD TERM SOFR+6.00%), 11.33% Cash, 9/11/2028 
9/11/2023 
$-  
 -  
 -  
 0.0%

Axiom Parent Holdings, LLC (h) 
Healthcare Services 
Class A Preferred Units 
6/19/2018 
 400,000  
 258,389  
 630,740  
 0.2%

ComForCare Health Care (d) 
Healthcare Services 
First Lien Term Loan (3M USD TERM SOFR+6.25%), 11.58% Cash, 1/31/2025 
1/31/2017 
$25,000,000  
 24,973,000  
 25,000,000  
 6.8%

  
  
Total Healthcare Services 
  
    
 50,329,442  
 51,094,111  
 14.1%

HemaTerra Holding Company, LLC (d) 
Healthcare Software 
First Lien Term Loan (1M USD TERM SOFR+8.25%), 13.57% Cash, 1/31/2027 
4/15/2019 
$54,927,713  
 54,624,303  
 55,087,003  
 14.9%

HemaTerra Holding Company, LLC 
Healthcare Software 
Delayed Draw Term Loan (1M USD TERM SOFR+8.25%), 13.57% Cash, 1/31/2027 
4/15/2019 
$13,755,875  
 13,710,513  
 13,795,767  
 3.7%

TRC HemaTerra, LLC (h) 
Healthcare Software 
Class D Membership Interests 
4/15/2019 
 2,487  
 2,816,693  
 5,362,439  
 1.4%

Procurement Partners, LLC 
Healthcare Software 
First Lien Term Loan (3M USD TERM SOFR+6.50%), 11.83% Cash, 5/12/2026 
11/12/2020 
$35,125,000  
 34,965,458  
 35,125,000  
 9.5%

Procurement Partners, LLC (j) 
Healthcare Software 
Delayed Draw Term Loan (3M USD TERM SOFR+6.50%), 11.83% Cash, 5/12/2026 
11/12/2020 
$10,300,000  
 10,230,001  
 10,300,000  
 2.8%

Procurement Partners Holdings LLC (h) 
Healthcare Software 
Class A Units 
11/12/2020 
 571,219  
 571,219  
 826,280  
 0.2%

  
  
Total Healthcare Software 
  
    
 116,918,187  
 120,496,489  
 32.5%

Roscoe Medical, Inc. (h) 
Healthcare Supply 
Common Stock 
3/26/2014 
 5,081  
 508,077  
 -  
 0.0%

  
  
Total Healthcare Supply 
  
    
 508,077  
 -  
 0.0%

 


F-12
 

 
Saratoga Investment
Corp.
Consolidated
Schedule of Investments
February 29,
2024
 


Company(1) 
Industry 
Investment Interest Rate/ Maturity 
Original
 Acquisition
 Date 
Principal/ Number of Shares  
Cost  
Fair Value (c)  
% of Net Assets 

Book4Time, Inc. (a)(d) 
Hospitality/Hotel 
First Lien Term Loan (3M USD TERM SOFR+7.50%), 12.83%, 12/22/2025 
12/22/2020 
$3,136,517  
 3,122,542  
 3,136,517  
 0.8%

Book4Time, Inc. (a) 
Hospitality/Hotel 
Delayed Draw Term Loan (3M USD TERM SOFR+7.50%), 12.83%, 12/22/2025 
12/22/2020 
$2,000,000  
 1,989,839  
 2,000,000  
 0.5%

Book4Time, Inc. (a)(h)(i) 
Hospitality/Hotel 
Class A Preferred Shares 
12/22/2020 
 200,000  
 156,826  
 389,531  
 0.1%

Knowland Group, LLC (k) 
Hospitality/Hotel 
Second Lien Term Loan (3M USD TERM SOFR+8.00%), 13.48% Cash/3.00% PIK, 12/31/2024 
11/9/2018 
$15,878,989  
 15,878,989  
 12,642,851  
 3.4%

Sceptre Hospitality Resources, LLC 
Hospitality/Hotel 
First Lien Term Loan (3M USD TERM SOFR+7.25%), 12.58% Cash, 11/15/2027 
4/27/2020 
$23,000,000  
 22,835,500  
 23,278,300  
 6.3%

Sceptre Hospitality Resources, LLC (j) 
Hospitality/Hotel 
Delayed Draw Term Loan (3M USD TERM SOFR+7.25%), 12.58% Cash, 11/15/2027 
9/2/2021 
$-  
 -  
 -  
 0.0%

  
  
Total Hospitality/Hotel 
  
    
 43,983,696  
 41,447,199  
 11.1%

Granite Comfort, LP (d) 
HVAC Services and Sales 
First Lien Term Loan (3M USD TERM SOFR+7.46%), 12.79% Cash, 5/16/2027 
11/16/2020 
$43,000,000  
 42,781,757  
 43,000,000  
 11.6%

Granite Comfort, LP (j) 
HVAC Services and Sales 
Delayed Draw Term Loan (3M USD TERM SOFR+7.46%), 12.79% Cash, 5/16/2027 
11/16/2020 
$16,207,805  
 16,059,588  
 16,207,805  
 4.4%

  
  
Total HVAC Services and Sales 
  
    
 58,841,345  
 59,207,805  
 16.0%

Vector Controls Holding Co., LLC (d) 
Industrial Products 
First Lien Term Loan  (3M USD TERM SOFR+6.50%), 11.75% Cash, 3/6/2025 
3/6/2013 
$923,886  
 923,886  
 923,886  
 0.2%

Vector Controls Holding Co., LLC (h) 
Industrial Products 
Warrants to Purchase Limited Liability Company Interests, Expires 11/30/2027 
5/31/2015 
 343  
 -  
 8,171,235  
 2.2%

  
  
Total Industrial Products 
  
    
 923,886  
 9,095,121  
 2.4%

 


F-13
 

 
Saratoga Investment
Corp.
Consolidated
Schedule of Investments
February 29,
2024
 


Company(1) 
Industry 
Investment Interest Rate/ Maturity 
Original
 Acquisition
 Date 
Principal/ Number of Shares  
Cost  
Fair Value (c)  
% of Net Assets 

AgencyBloc, LLC 
Insurance Software 
First Lien Term Loan  (1M USD TERM SOFR+7.76%), 13.09% Cash, 10/1/2026 
10/1/2021 
$15,788,864  
 15,686,250  
 15,806,231  
 4.3%

Panther ParentCo LLC (h) 
Insurance Software 
Class A Units 
10/1/2021 
 2,500,000  
 2,500,000  
 4,014,869  
 1.1%

  
  
Total Insurance Software 
  
    
 18,186,250  
 19,821,100  
 5.4%

LogicMonitor, Inc. (d) 
IT Services 
First Lien Term Loan (3M USD TERM SOFR+6.50%), 11.83% Cash, 5/17/2026 
3/20/2020 
$43,000,000  
 42,967,165  
 43,000,000  
 11.6%

  
  
Total IT Services 
  
    
 42,967,165  
 43,000,000  
 11.6%

ActiveProspect, Inc. (d) 
Lead Management Software 
First Lien Term Loan (3M USD TERM SOFR+6.00%), 11.53% Cash, 8/8/2027 
8/8/2022 
$12,000,000  
 11,920,834  
 12,120,000  
 3.3%

ActiveProspect, Inc. (j) 
Lead Management Software 
Delayed Draw Term Loan (3M USD TERM SOFR+6.00%), 11.53% Cash, 8/8/2027 
8/8/2022 
$-  
 -  
 -  
 0.0%

  
  
Total Lead Management Software 
  
    
 11,920,834  
 12,120,000  
 3.3%

Centerbase, LLC 
Legal Software 
First Lien Term Loan (3M USD TERM SOFR+7.75%), 13.08% Cash, 1/18/2027 
1/18/2022 
$21,033,360  
 20,882,496  
 20,709,446  
 5.6%

  
  
Total Legal Software 
  
    
 20,882,496  
 20,709,446  
 5.6%

Madison Logic, Inc. (d) 
Marketing Orchestration Software 
First Lien Term Loan (3M USD TERM SOFR+7.00%), 12.33% Cash, 12/30/2028 
12/30/2022 
$18,857,500  
 18,544,720  
 18,420,006  
 5.0%

  
  
Total Marketing Orchestration Software 
  
    
 18,544,720  
 18,420,006  
 5.0%

  


F-14
 

 
Saratoga Investment
Corp.
Consolidated
Schedule of Investments
February 29,
2024
 


Company(1) 
Industry 
Investment Interest Rate/ Maturity 
Original
 Acquisition
 Date 
Principal/ Number of Shares  
Cost  
Fair Value (c)  
% of Net Assets 

ARC Health OpCo LLC (d) 
Mental Healthcare Services 
First Lien Term Loan (3M USD TERM SOFR+8.47%), 13.81% Cash, 8/5/2027 
8/5/2022 
$6,500,000  
 6,438,832  
 6,490,900  
 1.8%

ARC Health OpCo LLC (d)(j) 
Mental Healthcare Services 
Delayed Draw Term Loan (3M USD TERM SOFR+8.47%), 13.81% Cash, 8/5/2027 
8/5/2022 
$26,914,577  
 26,903,916  
 26,876,897  
 7.3%

ARC Health OpCo LLC (h) 
Mental Healthcare Services 
Class A Preferred Units 
8/5/2022 
 3,818,400  
 4,169,599  
 4,009,323  
 1.1%

  
  
Total Mental Healthcare Services 
  
    
 37,512,347  
 37,377,120  
 10.2%

Chronus LLC 
Mentoring Software 
First Lien Term Loan (3M USD TERM SOFR+5.25%), 10.73% Cash, 8/26/2026 
8/26/2021 
$15,000,000  
 14,911,921  
 14,841,000  
 4.0%

Chronus LLC 
Mentoring Software 
First Lien Term Loan (3M USD TERM SOFR+6.00%), 11.48% Cash, 8/26/2026 
8/26/2021 
$5,000,000  
 4,962,938  
 4,947,000  
 1.3%

Chronus LLC (h) 
Mentoring Software 
Series A Preferred Stock 
8/26/2021 
 3,000  
 3,000,000  
 2,280,881  
 0.6%

  
  
Total Mentoring Software 
  
    
 22,874,859  
 22,068,881  
 5.9%

Omatic Software, LLC 
Non-profit Services 
First Lien Term Loan (3M USD TERM SOFR+8.00%), 13.59% Cash/1.00% PIK, 6/30/2025 
5/29/2018 
$16,270,192  
 16,239,922  
 16,266,938  
 4.4%

  
  
Total Non-profit Services 
  
    
 16,239,922  
 16,266,938  
 4.4%

Emily Street Enterprises, L.L.C. 
Office Supplies 
Senior Secured Note (3M USD TERM SOFR+7.50%), 12.83% Cash, 12/31/2025 
12/28/2012 
$6,000,000  
 5,992,437  
 6,027,000  
 1.6%

Emily Street Enterprises, L.L.C. (h) 
Office Supplies 
Warrant Membership Interests,  Expires 12/31/2025 
12/28/2012 
 49,318  
 400,000  
 1,153,874  
 0.3%

  
  
Total Office Supplies 
  
    
 6,392,437  
 7,180,874  
 1.9%

 


F-15
 

 
Saratoga Investment
Corp.
Consolidated
Schedule of Investments
February 29,
2024
 


Company(1) 
Industry 
Investment Interest Rate/ Maturity 
Original
 Acquisition
 Date 
Principal/ Number of Shares  
Cost  
Fair Value (c)  
% of Net Assets 

Buildout, Inc. (d) 
Real Estate Services 
First Lien Term Loan (3M USD TERM SOFR+7.00%), 12.43% Cash, 7/9/2025 
7/9/2020 
$14,000,000  
 13,950,236  
 13,631,800  
 3.7%

Buildout, Inc. 
Real Estate Services 
Delayed Draw Term Loan (3M USD TERM SOFR+7.00%), 12.47% Cash, 7/9/2025 
2/12/2021 
$38,500,000  
 38,342,798  
 37,487,450  
 10.1%

Buildout, Inc. (h)(i) 
Real Estate Services 
Limited Partner Interests 
7/9/2020 
 1,250  
 1,372,557  
 1,231,195  
 0.3%

  
  
Total Real Estate Services 
  
    
 53,665,591  
 52,350,445  
 14.1%

Wellspring Worldwide Inc. 
Research Software 
First Lien Term Loan  (1M USD TERM SOFR+6.00%), 11.32% Cash, 12/22/2028 
6/27/2022 
$9,552,000  
 9,474,084  
 9,483,226  
 2.6%

Wellspring Worldwide Inc. 
Research Software 
Delayed DrawTerm Loan  (1M USD TERM SOFR+6.00%), 11.32% Cash, 12/22/2028 
6/27/2022 
$14,400,000  
 14,227,504  
 14,296,320  
 3.9%

Archimedes Parent LLC (h) 
Research Software 
Class A Common Units 
6/27/2022 
 2,475,160  
 2,475,160  
 2,475,160  
 0.7%

  
  
Total Research Software 
  
    
 26,176,748  
 26,254,706  
 7.2%

LFR Chicken LLC 
Restaurant 
First Lien Term Loan (1M USD TERM SOFR+7.00%), 12.32% Cash, 11/19/2026 
11/19/2021 
$12,000,000  
 11,926,272  
 12,104,400  
 3.3%

LFR Chicken LLC 
Restaurant 
Delayed Draw Term Loan (1M USD TERM SOFR+7.00%), 12.32% Cash, 11/19/2026 
11/19/2021 
$9,000,000  
 8,935,545  
 9,078,300  
 2.5%

LFR Chicken LLC (h) 
Restaurant 
Series B Preferred Units 
11/19/2021 
 497,183  
 1,000,000  
 1,397,572  
 0.4%

  
  
Total Restaurant 
  
    
 21,861,817  
 22,580,272  
 6.2%

JobNimbus LLC 
Roofing Contractor Software 
First Lien Term Loan (1M USD TERM SOFR+8.75%), 14.17% Cash, 9/20/2026 
3/28/2023 
$18,777,459  
 18,624,294  
 19,014,055  
 5.1%

  
  
Total Roofing Contractor Software 
  
    
 18,624,294  
 19,014,055  
 5.1%

 


F-16
 

 
Saratoga Investment
Corp.
Consolidated
Schedule of Investments
February 29,
2024
 


Company(1) 
Industry 
Investment Interest Rate/ Maturity 
Original
 Acquisition
 Date 
Principal/ Number of Shares  
Cost  
Fair Value (c)  
% of Net Assets 

Pepper Palace, Inc. (d)(k) 
Specialty Food Retailer 
First Lien Term Loan (3M USD TERM SOFR+6.25%), 11.73% Cash, 6/30/2026 
6/30/2021 
$33,320,000  
 33,148,332  
 2,409,036  
 0.7%

Pepper Palace, Inc. (j)(k) 
Specialty Food Retailer 
Delayed Draw Term Loan (3M USD TERM SOFR+6.25%), 11.73% Cash, 6/30/2026 
6/30/2021 
$1,101,600  
 1,092,422  
 79,646  
 0.0%

Pepper Palace, Inc. (j)(k) 
Specialty Food Retailer 
Revolving Credit Facility (3M USD TERM SOFR+6.25%), 11.73% Cash, 6/30/2026 
6/30/2021 
$-  
 -  
 -  
 0.0%

Pepper Palace, Inc. (h) 
Specialty Food Retailer 
Membership Interest (Series A) 
6/30/2021 
 1,000,000  
 1,000,000  
 -  
 0.0%

Pepper Palace, Inc. (h) 
Specialty Food Retailer 
Membership Interest (Series B) 
6/30/2021 
 197,035  
 197,035  
 -  
 0.0%

  
  
Total Specialty Food Retailer 
  
    
 35,437,789  
 2,488,682  
 0.7%

ArbiterSports, LLC (d) 
Sports Management 
First Lien Term Loan (3M USD TERM SOFR+6.00%), 11.33% Cash, 2/21/2025 
2/21/2020 
$26,000,000  
 25,945,071  
 26,000,000  
 7.0%

ArbiterSports, LLC 
Sports Management 
Delayed Draw Term Loan (3M USD TERM SOFR+6.00%), 11.33% Cash, 2/21/2025 
2/21/2020 
$1,000,000  
 1,000,000  
 1,000,000  
 0.3%

  
  
Total Sports Management 
  
    
 26,945,071  
 27,000,000  
 7.3%

Avionte Holdings, LLC (h) 
Staffing Services 
Class A Units 
1/8/2014 
 100,000  
 100,000  
 3,287,970  
 0.9%

  
  
Total Staffing Services 
  
    
 100,000  
 3,287,970  
 0.9%

JDXpert 
Talent Acquisition Software 
First Lien Term Loan (3M USD TERM SOFR+8.50%), 14.10% Cash, 5/2/2027 
5/2/2022 
$6,000,000  
 5,955,935  
 6,060,000  
 1.6%

JDXpert (j) 
Talent Acquisition Software 
Delayed Draw Term Loan (3M USD TERM SOFR+8.50%), 14.10% Cash, 5/2/2027 
5/2/2022 
$1,000,000  
 991,649  
 1,010,000  
 0.3%

Jobvite, Inc. (d) 
Talent Acquisition Software 
First Lien Term Loan (6M USD TERM SOFR+8.00%), 13.27% Cash, 8/5/2028 
8/5/2022 
$20,000,000  
 19,875,273  
 19,826,000  
 5.6%

  
  
Total Talent Acquisition Software 
  
    
 26,822,857  
 26,896,000  
 7.5%

 


F-17
 

 
Saratoga Investment
Corp.
Consolidated
Schedule of Investments
February 29,
2024
 


Company(1) 
Industry 
Investment Interest Rate/ Maturity 
Original
 Acquisition
 Date 
Principal/ Number of Shares  
Cost  
Fair Value (c)  
% of Net Assets 

VetnCare MSO, LLC (j) 
Veterinary Services 
Delayed Draw Term Loan (3M USD TERM SOFR+5.75%), 11.08% Cash, 5/12/2028 
5/12/2023 
$4,680,505  
 4,638,599  
 4,753,048  
 1.3%

  
  
Total Veterinary Services 
  
    
 4,638,599  
 4,753,048  
 1.3%

Sub Total Non-control/Non-affiliate investments 
  
  
  
    
 1,035,879,751  
 1,019,774,616  
 276.5%

Affiliate investments - 7.5% (b) 
  
  
  
    
    
    
   

ETU Holdings, Inc. (f) 
Corporate Education Software 
First Lien Term Loan (3M USD TERM SOFR+9.00%), 14.48% Cash, 8/18/2027 
8/18/2022 
$7,000,000  
 6,945,060  
 6,983,200  
 1.9%

ETU Holdings, Inc. (f) 
Corporate Education Software 
Second Lien Term Loan 15.00% PIK, 2/18/2028 
8/18/2022 
$6,130,483  
 6,089,408  
 5,454,290  
 1.5%

ETU Holdings, Inc. (f)(h) 
Corporate Education Software 
Series A Preferred Units 
8/18/2022 
 3,000,000  
 3,000,000  
 1,162,040  
 0.3%

  
  
Total Corporate Education Software 
  
    
 16,034,468  
 13,599,530  
 3.7%

Axero Holdings, LLC (f) 
Employee Collaboration Software 
First Lien Term Loan (3M USD TERM SOFR+8.00%), 13.48% Cash, 6/30/2026 
6/30/2021 
$5,500,000  
 5,468,859  
 5,555,000  
 1.5%

Axero Holdings, LLC (f) 
Employee Collaboration Software 
Delayed Draw Term Loan (3M USD TERM SOFR+8.00%), 13.48% Cash, 6/30/2026 
6/30/2021 
$1,100,000  
 1,092,870  
 1,111,000  
 0.3%

Axero Holdings, LLC (f)(j) 
Employee Collaboration Software 
Revolving Credit Facility (3M USD TERM SOFR+8.00%), 13.48% Cash, 6/30/2026 
2/3/2022 
$-  
 -  
 -  
 0.0%

Axero Holdings, LLC (f)(h) 
Employee Collaboration Software 
Series A Preferred Units 
6/30/2021 
 2,055,609  
 2,055,609  
 2,877,000  
 0.8%

Axero Holdings, LLC (f)(h) 
Employee Collaboration Software 
Series B Preferred Units 
6/30/2021 
 2,055,609  
 2,055,609  
 4,606,607  
 1.2%

  
  
Total Employee Collaboration Software 
  
    
 10,672,947  
 14,149,607  
 3.8%

Sub Total Affiliate investments 
  
  
  
    
 26,707,415  
 27,749,137  
 7.5%

Control investments - 24.7% (b) 
  
  
  
    
    
    
   

 


F-18
 

 
Saratoga Investment
Corp.
Consolidated
Schedule of Investments
February 29,
2024
 


Company(1) 
Industry 
Investment Interest Rate/ Maturity 
Original
 Acquisition
 Date 
Principal/ Number of Shares  
Cost  
Fair Value (c)  
% of Net Assets 

Netreo Holdings, LLC (g) 
IT Services 
First Lien Term Loan (3M USD TERM SOFR +6.50%), 11.98% Cash/3.50% PIK 12/31/2025 
7/3/2018 
$5,693,748  
 5,686,791  
 5,582,719  
 1.5%

Netreo Holdings, LLC (d)(g) 
IT Services 
Delayed Draw Term Loan (3M USD TERM SOFR +6.50%), 11.98% Cash/3.50% PIK, 12/31/2025 
5/26/2020 
$25,271,214  
 25,193,452  
 24,778,425  
 6.7%

Netreo Holdings, LLC (g)(h) 
IT Services 
Common Stock Class A Units 
7/3/2018 
 4,600,677  
 8,344,500  
 5,060,745  
 1.4%

  
  
Total IT Services 
  
    
 39,224,743  
 35,421,889  
 9.6%

Saratoga Investment Corp. CLO 2013-1, Ltd. (a)(e)(g) 
Structured Finance Securities 
Other/Structured Finance Securities 0.00%, 4/20/2033 
1/22/2008 
$111,000,000  
 22,001,887  
 9,500,627  
 2.6%

Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-2-R-3 Note (a)(g) 
Structured Finance Securities 
Other/Structured Finance Securities (3M USD TERM SOFR+10.00%), 15.60%, 4/20/2033 
8/9/2021 
$9,375,000  
 9,375,000  
 8,875,227  
 2.4%

Saratoga Investment Corp. Senior Loan Fund 2022-1, Ltd. Class E Note (a)(g) 
Structured Finance Securities 
Other/Structured Finance Securities (3M USD TERM SOFR+8.55%), 13.88%, 10/20/2033 
10/28/2022 
$12,250,000  
 11,392,500  
 12,250,000  
 3.3%

  
  
Total Structured Finance Securities 
  
    
 42,769,387  
 30,625,854  
 8.3%

Saratoga Senior Loan Fund I JV, LLC (a)(g)(j) 
Investment Fund 
Unsecured Loan 10.00%, 10/20/2033 
12/17/2021 
$17,618,954  
 17,618,954  
 15,818,297  
 4.3%

Saratoga Senior Loan Fund I JV, LLC (a)(g) 
Investment Fund 
Membership Interest 
12/17/2021 
 17,583,486  
 17,583,487  
 9,403,996  
 2.5%

  
  
Total Investment Fund 
  
    
 35,202,441  
 25,222,293  
 6.8%

Sub Total Control investments 
  
  
  
    
 117,196,571  
 91,270,036  
 24.7%

TOTAL INVESTMENTS - 308.7% (b) 
  
  
  
    
$1,179,783,737  
$1,138,793,789  
 308.7%

 


F-19
 

 
Saratoga Investment
Corp.
Consolidated
Schedule of Investments
February 29,
2024
 


  
Number of Shares  
Cost  
Fair Value  
% of
 Net Assets 

Cash and cash equivalents and cash and cash equivalents, reserve accounts - 10.9% (b) 
   
   
   
  

U.S. Bank Money Market (l) 
 40,507,124  
$40,507,124  
$40,507,124  
 10.9%

Total cash and cash equivalents and cash and cash equivalents, reserve accounts 
 40,507,124  
$40,507,124  
$40,507,124  
 10.9%

 

(1)Securities are exempt from registration under Rule 144A of
the Securities Act of 1933, as amended, and are restricted securities. Money market funds are valued at net asset value and are considered level 1 investments within the fair value
hierarchy.

 

(a)Represents an investment that is not a “qualifying asset”
under Section 55(a) of the Investment Company Act of 1940, as amended (the 1940 Act”). As of February 29, 2024, non-qualifying assets
represent 6.2% of the Company’s portfolio at fair value. As a BDC, the Company generally has to invest at least 70% of its total assets
in qualifying assets.

 

(b)Percentages are based on net assets of $370,224,108 as of
February 29, 2024.

 

(c)Because there is no “readily available market quotations”
(as defined in the 1940 Act) for these investments, the fair values of these investments were determined using significant unobservable
inputs and approved in good faith by our board of directors. These investments have been included as Level 3 in the Fair Value Hierarchy
(see Note 3 to the consolidated financial statements).

 

(d)These securities are either fully or partially pledged as
collateral under the Company’s senior secured revolving credit facility (see Note 8 to the consolidated financial statements).

 

(e)This investment does not have a stated interest rate that
is payable thereon. As a result, the 0.00% interest rate in the table above represents the effective interest rate currently earned on
the investment cost and is based on the current cash interest and other income generated by the investment.

 


F-20
 

 
Saratoga Investment
Corp.
Consolidated
Schedule of Investments
February 29,
2024
 


(f)As defined in the 1940 Act, this portfolio company is an
“affiliate” as we own between 5.0% and 25.0% of the outstanding voting securities. Modis Dental Partners OpCo, LLC and Alpha
Aesthetics Partners OpCo, LLC are no longer affiliates as of February 29, 2024. Transactions during the year ended February
29, 2024 in which the issuer was an affiliate are as follows:


 


Company 
Purchases  
Sales  
Total Interest from Investments  
Management Fee Income  
Net Realized Gain (Loss) from Investments  
Net Change in Unrealized Appreciation (Depreciation) 

Axero Holdings, LLC 
$-  
$-  
$931,008  
$        -  
$-  
$976,251 

ETU Holdings, Inc. 
 -  
 -  
 1,915,718  
 -  
 -  
 (2,518,080)

Modis Dental Partners OpCo, LLC 
 8,845,000  
 -  
 656,579  
 -  
 -  
 - 

Alpha Aesthetics Partners OpCo, LLC 
 10,498,789  
 -  
 670,737  
 -  
 -  
 - 

Total 
$19,343,789  
$-  
$4,174,042  
$-  
$-  
$(1,541,829)


 

(g)As defined in the 1940 Act, we “control” this portfolio company
because we own more than 25% of the portfolio company’s outstanding voting securities. Transactions during the year ended February 29,
2024 in which the issuer was both an affiliate and a portfolio company that we control are as follows:

 


Company 
Purchases  
Sales  
Total Interest from Investments  
Total Dividends from Investments  
Management Fee Income  
Net Realized  Gain (Loss) from Investments  
Net Change in Unrealized Appreciation (Depreciation) 

Netreo Holdings, LLC 
$2,475,000  
$-  
$4,374,804  
$-  
$-  
$-  
$(12,083,067)

Saratoga Investment Corp. CLO 2013-1, Ltd. 
 -  
 -  
 -  
 -  
 3,270,232  
 -  
 (4,733,934)

Saratoga Investment Corp. Senior Loan Fund 2022-1, Ltd. Class E Note 
 -  
 -  
 1,696,890  
 -  
 -  
 -  
 895,505 

Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-2-R-3 Note 
 -  
 -  
 1,469,668  
 -  
 -  
 -  
 43,821 

Saratoga Senior Loan Fund I JV, LLC 
 -  
 -  
 1,781,472  
 -  
 -  
 -  
 (1,800,657)

Saratoga Senior Loan Fund I JV, LLC 
 -  
 -  
 -  
 5,911,564  
 -  
 -  
 (3,702,956)

Total 
$2,475,000  
$-  
$9,322,834  
$5,911,564  
$3,270,232  
$-  
$(21,381,288)

 

(h)Non-income producing at February 29, 2024.

 

(i)Includes securities issued by an affiliate of the company.

 

(j)All or a portion of this investment has an unfunded commitment
as of February 29, 2024. (See Note 9 to the consolidated financial statements).


  


(k)As of February 29, 2024, the investment was on non-accrual
status. The fair value of these investments was approximately $18.9 million, which represented 1.7% of the Company’s portfolio (see Note
2 to the consolidated financial statements).

 

(l)Included within cash and cash equivalents and cash and cash
equivalents, reserve accounts in the Company’s consolidated statements of assets and liabilities as of February 29, 2024.

 
SOFR - Secured Overnight Financing Rate
 
1M USD TERM SOFR - The 1 month USD TERM SOFR rate as of February 29, 2024 was 5.32%.
3M USD TERM
SOFR - The 3 month USD TERM SOFR rate as of February 29, 2024 was 5.33%.
6M USD TERM SOFR - The 6 month USD TERM SOFR rate as of February
29, 2024 was 5.27%.
PIK - Payment-in-Kind (see Note 2 to the consolidated financial statements).

 
See accompanying notes to consolidated financial statements.
 


F-21
 

 
Saratoga Investment Corp.

Consolidated Schedule
of Investments
February 28, 2023
 


Company(1) 
Industry 
Investment
    
Interest Rate/ Maturity 
Original

    Acquisition
 Date 
Principal/
    Number of Shares  
Cost  
Fair
    
Value (c)  
%
    of Net Assets 

Non-control/Non-affiliate
    investments - 238.6% (b) 
  
  
  
   
   
   
  

Altvia MidCo, LLC. 
Alternative Investment Management Software 
First Lien Term Loan (3M USD TERM SOFR+8.50%), 13.39% Cash, 7/18/2027 
7/18/2022 
$7,980,000  
$7,907,457  
$7,911,372  
 2.3%

Altvia
    MidCo, LLC. (h) 
Alternative
    Investment Management Software 
Series
    A-1 Preferred Shares 
7/18/2022 
 2,000,000  
 2,000,000  
 2,548,000  
 0.7%

  
  
Total
    Alternative Investment Management Software 
  
    
 9,907,457  
 10,459,372  
 3.0%

Artemis Wax Corp. (d)(j) 
Consumer Services 
Delayed Draw Term Loan (1M USD TERM SOFR+6.75%), 11.41% Cash, 5/20/2026 
5/20/2021 
$57,500,000  
 57,059,057  
 57,500,000  
 16.6%

Artemis
    Wax Corp. (h) 
Consumer
    Services 
Series
    B-1 Preferred Stock 
5/20/2021 
 934,463  
 1,500,000  
 4,642,322  
 1.3%

Artemis
    Wax Corp. (h) 
Consumer
    Services 
Series
    D Preferred Stock 
12/22/2022 
 278,769  
 1,500,000  
 1,500,005  
 0.4%

  
  
Total
    Consumer Services 
  
    
 60,059,057  
 63,642,327  
 18.3%

Schoox,
    Inc. (h), (i) 
Corporate
    Education Software 
Series
    1 Membership Interest 
12/8/2020 
 1,050  
 475,698  
 3,809,091  
 1.1%

  
  
Total
    Corporate Education Software 
  
    
 475,698  
 3,809,091  
 1.1%

GreyHeller
    LLC (h) 
Cyber
    Security 
Common
    Stock 
11/10/2021 
 7,857,689  
 1,906,275  
 2,509,210  
 0.7%

  
  
Total
    Cyber Security 
  
    
 1,906,275  
 2,509,210  
 0.7%

New England Dental Partners 
Dental Practice Management 
First Lien Term Loan (3M USD LIBOR+8.00%), 12.97% Cash, 11/25/2025 
11/25/2020 
$6,555,000  
 6,514,437  
 6,523,536  
 1.9%

New England Dental Partners 
Dental Practice Management 
Delayed Draw Term Loan (3M USD LIBOR+8.00%), 12.97% Cash, 11/25/2025 
11/25/2020 
$4,650,000  
 4,627,032  
 4,627,680  
 1.3%

Gen4 Dental Partners Holdings, LLC (j) 
Dental Practice Management 
Delayed Draw Term Loan (3M USD TERM SOFR+10.35%), 15.24% Cash, 4/29/2026 
2/8/2023 
$-  
 (94,504) 
 -  
 0.0%

Gen4
    Dental Partners Holdings, LLC (i) 
Dental
    Practice Management 
Series
    A Preferred Units 
2/8/2023 
 480,769  
 1,000,000  
 1,000,000  
 0.3%

  
  
Total
    Dental Practice Management 
  
    
 12,046,965  
 12,151,216  
 3.5%

Exigo, LLC (d) 
Direct Selling Software 
First Lien Term Loan (1M USD LIBOR+5.75%), 10.42% Cash, 3/16/2027 
3/16/2022 
$24,812,500  
 24,632,494  
 24,504,825  
 7.1%

Exigo, LLC (j) 
Direct Selling Software 
Delayed Draw Term Loan (1M USD LIBOR+5.75%), 10.42% Cash, 3/16/2027 
3/16/2022 
$-  
 -  
 (51,667) 
 0.0%

Exigo, LLC (j) 
Direct Selling Software 
Revolving Credit Facility (1M USD LIBOR+5.75%), 10.42% Cash, 3/16/2027 
3/16/2022 
$208,334  
 208,333  
 195,417  
 0.1%

Exigo,
    LLC (h), (i) 
Direct
    Selling Software 
Common
    Units 
3/16/2022 
 1,041,667  
 1,041,667  
 1,121,575  
 0.3%

  
  
Total
    Direct Selling Software 
  
    
 25,882,494  
 25,770,150  
 7.5%

C2 Educational Systems (d) 
Education Services 
First Lien Term Loan (3M USD LIBOR+8.50%), 13.47% Cash, 5/31/2023 
5/31/2017 
$18,500,000  
 18,497,146  
 18,525,900  
 5.3%

C2 Education
    Systems, Inc. (h) 
Education
    Services 
Series
    A-1 Preferred Stock 
5/18/2021 
 3,127  
 499,904  
 629,892  
 0.2%

Zollege PBC 
Education Services 
First Lien Term Loan (3M USD LIBOR+7.00%), 11.97% Cash, 5/11/2026 
5/11/2021 
$16,000,000  
 15,905,830  
 14,827,200  
 4.3%

Zollege PBC (j) 
Education Services 
Delayed Draw Term Loan (3M USD LIBOR+7.00%), 11.97% Cash, 5/11/2026 
5/11/2021 
$500,000  
 496,809  
 390,050  
 0.1%

Zollege
    PBC (h) 
Education
    Services 
Class
    A Units 
5/11/2021 
 250,000  
 250,000  
 115,676  
 0.0%

  
  
Total
    Education Services 
  
    
 35,649,689  
 34,488,718  
 9.9%

 


F-22
 

 
Saratoga Investment Corp.

Consolidated Schedule
of Investments
February 28, 2023
 


Company(1) 
Industry 
Investment
    
Interest Rate/ Maturity 
Original

    Acquisition
 Date 
Principal/
    Number of Shares  
Cost  
Fair
    
Value (c)  
%
    of Net Assets 

Destiny
    Solutions Inc. (h), (i) 
Education
    Software 
Limited
    Partner Interests 
5/16/2018 
 3,068  
 3,969,291  
 8,941,350  
 2.6%

GoReact 
Education Software 
First Lien Term Loan (3M USD TERM SOFR+7.50%), 13.59% Cash, 1/17/2025 
1/17/2020 
$8,006,000  
 7,952,042  
 7,982,783  
 2.3%

GoReact (j) 
Education Software 
Delayed Draw Term Loan (3M USD TERM SOFR+7.50%), 13.59% Cash, 1/17/2025 
1/18/2022 
$1,000,750  
 1,000,750  
 997,848  
 0.3%

Identity
    Automation Systems (h) 
Education
    Software 
Common
    Stock Class A-2 Units 
8/25/2014 
 232,616  
 232,616  
 218,168  
 0.1%

Identity
    Automation Systems (h) 
Education
    Software 
Common
    Stock Class A-1 Units 
3/6/2020 
 43,715  
 171,571  
 217,370  
 0.1%

Ready Education 
Education Software 
First Lien Term Loan (3M USD TERM SOFR+6.00%), 10.89% Cash, 8/5/2027 
8/5/2022 
$27,000,000  
 26,751,573  
 26,597,700  
 7.7%

  
  
Total
    Education Software 
  
    
 40,077,843  
 44,955,219  
 13.1%

TG
    Pressure Washing Holdings, LLC (h) 
Facilities
    Maintenance 
Preferred
    Equity 
8/12/2019 
 488,148  
 488,148  
 407,760  
 0.1%

  
  
Total
    Facilities Maintenance 
  
    
 488,148  
 407,760  
 0.1%

Davisware, LLC 
Field Service Management 
First Lien Term Loan (3M USD TERM SOFR+7.00%), 11.89% Cash, 7/31/2024 
9/6/2019 
$6,000,000  
 5,972,735  
 5,988,000  
 1.7%

Davisware, LLC 
Field Service Management 
Delayed Draw Term Loan  (3M USD TERM SOFR+7.00%), 11.89% Cash, 7/31/2024 
9/6/2019 
$3,977,790  
 3,950,992  
 3,969,834  
 1.1%

  
  
Total
    Field Service Management 
  
    
 9,923,727  
 9,957,834  
 2.8%

B. Riley Financial, Inc. (a) 
Financial Services 
Senior Unsecured Loan 6.75% Cash, 5/31/2024 
10/18/2022 
$165,301  
 165,301  
 160,077  
 0.0%

GDS Software Holdings, LLC 
Financial Services 
First Lien Term Loan  (3M USD LIBOR+7.00%), 11.97% Cash, 12/30/2026 
12/30/2021 
$22,713,926  
 22,603,970  
 22,311,890  
 6.4%

GDS Software Holdings, LLC 
Financial Services 
Delayed Draw Term Loan (3M USD LIBOR+7.00%), 11.97% Cash, 12/30/2026 
12/30/2021 
$3,286,074  
 3,257,297  
 3,227,910  
 0.9%

GDS
    Software Holdings, LLC  (h) 
Financial
    Services 
Common
    Stock Class A Units 
8/23/2018 
 250,000  
 250,000  
 518,413  
 0.1%

  
  
Total
    Financial Services 
  
    
 26,276,568  
 26,218,290  
 7.4%

Ascend Software, LLC 
Financial Services Software 
First Lien Term Loan (3M USD LIBOR+7.50%), 12.47% Cash, 12/15/2026 
12/15/2021 
$6,000,000  
 5,952,354  
 5,902,200  
 1.7%

Ascend Software, LLC (j) 
Financial Services Software 
Delayed Draw Term Loan (3M USD LIBOR+7.50%), 12.47% Cash, 12/15/2026 
12/15/2021 
$3,300,000  
 3,269,283  
 3,194,050  
 0.9%

  
  
Total
    Financial Services Software 
  
    
 9,221,637  
 9,096,250  
 2.6%

Axiom
    Parent Holdings, LLC (h) 
Healthcare
    Services 
Common
    Stock Class A Units 
6/19/2018 
$400,000  
 400,000  
 1,286,156  
 0.4%

ComForCare Health Care (d) 
Healthcare Services 
First Lien Term Loan (3M USD LIBOR+6.25%), 11.22% Cash, 1/31/2025 
1/31/2017 
$25,000,000  
 24,938,666  
 25,000,000  
 7.2%

  
  
Total
    Healthcare Services 
  
    
 25,338,666  
 26,286,156  
 7.6%

 


F-23
 

 
Saratoga Investment Corp.

Consolidated Schedule
of Investments
February 28, 2023
 


Company(1) 
Industry 
Investment
    
Interest Rate/ Maturity 
Original

    Acquisition
 Date 
Principal/
    Number of Shares  
Cost  
Fair
    
Value (c)  
%
    of Net Assets 

HemaTerra Holding Company, LLC (d) 
Healthcare Software 
First Lien Term Loan (1M USD TERM SOFR+8.25%), 12.91% Cash, 1/31/2027 
4/15/2019 
$55,483,943  
 55,105,372  
 55,445,104  
 16.0%

HemaTerra Holding Company, LLC 
Healthcare Software 
Delayed Draw Term Loan (1M USD TERM SOFR+8.25%), 12.91% Cash, 1/31/2027 
4/15/2019 
$13,895,175  
 13,829,142  
 13,885,448  
 4.0%

TRC HemaTerra,
    LLC (h) 
Healthcare
    Software 
Class
    D Membership Interests 
4/15/2019 
 2,487  
 2,816,693  
 4,606,741  
 1.3%

Procurement Partners, LLC 
Healthcare Software 
First Lien Term Loan (3M USD TERM SOFR+6.50%), 11.39% Cash, 5/12/2026 
11/12/2020 
$35,125,000  
 34,906,981  
 35,103,925  
 10.1%

Procurement Partners, LLC (j) 
Healthcare Software 
Delayed Draw Term Loan (3M USD TERM SOFR+6.50%), 11.39% Cash, 5/12/2026 
11/12/2020 
$9,300,000  
 9,219,412  
 9,294,420  
 2.7%

Procurement
    Partners Holdings LLC (h) 
Healthcare
    Software 
Class
    A Units 
11/12/2020 
 571,219  
 571,219  
 788,283  
 0.2%

  
  
Total
    Healthcare Software 
  
    
 116,448,819  
 119,123,921  
 34.3%

Roscoe
    Medical, Inc. (h) 
Healthcare
    Supply 
Common
    Stock 
3/26/2014 
 5,081  
 508,077  
 -  
 0.0%

  
  
Total
    Healthcare Supply 
  
    
 508,077  
 -  
 0.0%

Book4Time, Inc. (a), (d) 
Hospitality/Hotel 
First Lien Term Loan (3M USD LIBOR+7.50%), 12.47%, 12/22/2025 
12/22/2020 
$3,136,517  
 3,116,896  
 3,136,517  
 0.9%

Book4Time, Inc. (a) 
Hospitality/Hotel 
Delayed Draw Term Loan (3M USD LIBOR+7.50%), 12.47%, 12/22/2025 
12/22/2020 
$2,000,000  
 1,984,212  
 2,000,000  
 0.6%

Book4Time,
    Inc. (a), (h), (i) 
Hospitality/Hotel 
Class
    A Preferred Shares 
12/22/2020 
 200,000  
 156,826  
 281,778  
 0.1%

Knowland Group, LLC (h), (k) 
Hospitality/Hotel 
Second Lien Term Loan (3M USD LIBOR+8.00%), 13.97% Cash/1.00% PIK, 5/9/2024 
11/9/2018 
$15,878,989  
 15,878,989  
 9,760,821  
 2.8%

Sceptre Hospitality Resources, LLC 
Hospitality/Hotel 
First Lien Term Loan (3M USD TERM SOFR+7.25%), 12.14% Cash, 11/15/2027 
4/27/2020 
$23,000,000  
 22,806,316  
 22,793,000  
 6.6%

Sceptre Hospitality Resources, LLC (j) 
Hospitality/Hotel 
Delayed Draw Term Loan (3M USD TERM SOFR+7.25%), 12.14% Cash, 11/15/2027 
9/2/2021 
$-  
 -  
 -  
 0.0%

  
  
Total
    Hospitality/Hotel 
  
    
 43,943,239  
 37,972,116  
 11.0%

Granite Comfort, LP (d) 
HVAC Services and Sales 
First Lien Term Loan (3M USD TERM SOFR+7.86%), 12.75% Cash, 11/16/2025 
11/16/2020 
$43,000,000  
 42,694,831  
 42,570,000  
 12.3%

Granite Comfort, LP (j) 
HVAC Services and Sales 
Delayed Draw Term Loan (3M USD TERM SOFR+7.86%), 12.75% Cash, 11/16/2025 
11/16/2020 
$12,000,000  
 11,894,177  
 11,880,000  
 3.4%

  
  
Total
    HVAC Services and Sales 
  
    
 54,589,008  
 54,450,000  
 15.7%

Vector Controls Holding Co., LLC (d) 
Industrial Products 
First Lien Term Loan  (3M USD LIBOR+6.50%), 11.47% Cash, 3/6/2025 
3/6/2013 
$3,089,986  
 3,089,986  
 3,089,986  
 0.9%

Vector Controls Holding Co., LLC (h) 
Industrial Products 
Warrants to Purchase Limited Liability Company Interests, Expires 11/30/2027 
5/31/2015 
 343  
 -  
 6,517,923  
 1.9%

  
  
Total
    Industrial Products 
  
    
 3,089,986  
 9,607,909  
 2.8%

 


F-24
 

 
Saratoga Investment Corp.

Consolidated Schedule
of Investments
February 28, 2023
 


Company(1) 
Industry 
Investment
    
Interest Rate/ Maturity 
Original

    Acquisition
 Date 
Principal/
    Number of Shares  
Cost  
Fair
    
Value (c)  
%
    of Net Assets 

AgencyBloc, LLC 
Insurance Software 
First Lien Term Loan  (1M USD BSBY+8.00%), 12.58% Cash, 10/1/2026 
10/1/2021 
$13,469,318  
 13,376,121  
 13,449,114  
 3.9%

Panther
    ParentCo LLC (h) 
Insurance
    Software 
Class
    A Units 
10/1/2021 
 2,500,000  
 2,500,000  
 3,311,442  
 1.0%

  
  
Total
    Insurance Software 
  
    
 15,876,121  
 16,760,556  
 4.9%

LogicMonitor, Inc. (d) 
IT Services 
First Lien Term Loan (3M USD TERM SOFR+6.50%), 11.39% Cash, 5/17/2026 
3/20/2020 
$43,000,000  
 42,953,087  
 43,000,000  
 12.4%

  
  
  Total
    IT Services 
  
    
 42,953,087  
 43,000,000  
 12.4%

ActiveProspect, Inc. (d) 
Lead Management Software 
First Lien Term Loan (3M USD LIBOR+6.00%), 10.97% Cash, 8/8/2027 
8/8/2022 
$12,000,000  
 11,906,362  
 12,090,000  
 3.5%

ActiveProspect, Inc. (j) 
Lead Management Software 
Delayed Draw Term Loan (3M USD LIBOR+6.00%), 10.97% Cash, 8/8/2027 
8/8/2022 
$-  
 -  
 -  
 0.0%

  
  
Total
    Lead Management Software 
  
    
 11,906,362  
 12,090,000  
 3.5%

Centerbase, LLC 
Legal Software 
First Lien Term Loan (1M USD TERM SOFR+7.75%), 12.41% Cash, 1/18/2027 
1/18/2022 
$21,247,440  
 21,055,931  
 20,699,256  
 6.0%

  
  
Total
    Legal Software 
  
    
 21,055,931  
 20,699,256  
 6.0%

Madison Logic, Inc. (d) 
Marketing Orchestration Software 
First Lien Term Loan (3M USD TERM SOFR+7.00%), 11.89% Cash, 12/30/2028 
12/10/2021 
$19,000,000  
 18,626,777  
 18,715,000  
 5.4%

  
  
Total
    Marketing Orchestration Software 
  
    
 18,626,777  
 18,715,000  
 5.4%

ARC Health OpCo LLC (d) 
Mental Healthcare Services 
First Lien Term Loan (3M USD TERM SOFR+8.48%), 13.37% Cash, 8/5/2027 
8/5/2022 
$6,500,000  
 6,427,296  
 6,461,000  
 1.9%

ARC Health OpCo LLC (d), (j) 
Mental Healthcare Services 
Delayed Draw Term Loan (3M USD TERM SOFR+8.48%), 13.37% Cash, 8/5/2027 
8/5/2022 
$7,726,978  
 7,634,711  
 7,680,616  
 2.2%

ARC
    Health OpCo LLC (h) 
Mental
    Healthcare Services 
Class
    A Preferred Shares 
8/5/2022 
 2,808,236  
 3,035,108  
 2,780,153  
 0.8%

  
  
Total
    Mental Healthcare Services 
  
    
 17,097,115  
 16,921,769  
 4.9%

Chronus LLC 
Mentoring Software 
First Lien Term Loan (3M USD LIBOR+5.25), 10.22% Cash, 8/26/2026 
8/26/2021 
$15,000,000  
 14,887,780  
 14,890,500  
 4.3%

Chronus LLC 
Mentoring Software 
First Lien Term Loan (3M USD LIBOR+6.00), 10.97% Cash, 8/26/2026 
8/26/2021 
$3,000,000  
 2,973,634  
 2,978,100  
 0.9%

Chronus
    LLC (h) 
Mentoring
    Software 
Series
    A Preferred Stock 
8/26/2021 
 3,000  
 3,000,000  
 3,490,403  
 1.0%

  
  
Total
    Mentoring Software 
  
    
 20,861,414  
 21,359,003  
 6.2%

Omatic Software, LLC 
Non-profit Services 
First Lien Term Loan (3M USD TERM SOFR+8.00%), 14.15% Cash/1.00% PIK, 1/31/2024 
5/29/2018 
$13,122,781  
 13,091,197  
 13,095,223  
 3.8%

  
  
Total
    Non-profit Services 
  
    
 13,091,197  
 13,095,223  
 3.8%

Emily Street Enterprises, L.L.C. 
Office Supplies 
Senior Secured Note (3M USD TERM SOFR+7.50%), 12.39% Cash, 12/31/2025 
12/28/2012 
$6,000,000  
 5,974,379  
 5,965,800  
 1.7%

Emily Street Enterprises, L.L.C. (h) 
Office Supplies 
Warrant Membership Interests,                           Expires 12/31/2025 
12/28/2012 
 49,318  
 400,000  
 406,755  
 0.1%

  
  
Total
    Office Supplies 
  
    
 6,374,379  
 6,372,555  
 1.8%

 


F-25
 

 
Saratoga Investment Corp.

Consolidated Schedule
of Investments
February 28, 2023
 


Company(1) 
Industry 
Investment
    
Interest Rate/ Maturity 
Original

    Acquisition
 Date 
Principal/
    Number of Shares  
Cost  
Fair
    
Value (c)  
%
    of Net Assets 

Buildout, Inc. 
Real Estate Services 
First Lien Term Loan (3M USD LIBOR+7.00%), 11.97% Cash, 7/9/2025 
7/9/2020 
$14,000,000  
 13,924,435  
 13,855,800  
 4.0%

Buildout, Inc. 
Real Estate Services 
Delayed Draw Term Loan (3M USD LIBOR+7.00%), 11.97% Cash, 7/9/2025 
2/12/2021 
$38,500,000  
 38,257,589  
 38,103,450  
 11.0%

Buildout,
    Inc. (h), (i) 
Real
    Estate Services 
Limited
    Partner Interests 
7/9/2020 
 1,250  
 1,372,557  
 1,447,219  
 0.4%

  
  
Total
    Real Estate Services 
  
    
 53,554,581  
 53,406,469  
 15.4%

Archimedes
    Parent LLC (h) 
Research
    Software 
Class
    A Common Units 
6/27/2022 
 1,125,160  
 1,125,160  
 1,136,503  
 0.3%

Wellspring Worldwide Inc. 
Research Software 
First Lien Term Loan  (1M USD BSBY+7.25%), 11.83% Cash, 6/27/2027 
6/27/2022 
$9,600,000  
 9,503,123  
 9,540,480  
 2.7%

  
  
Total
    Research Software 
  
    
 10,628,283  
 10,676,983  
 3.0%

LFR Chicken LLC 
Restaurant 
First Lien Term Loan (1M USD LIBOR+7.00%), 11.67% Cash, 11/19/2026 
11/19/2021 
$12,000,000  
 11,906,864  
 11,866,800  
 3.4%

LFR Chicken LLC (j) 
Restaurant 
Delayed Draw Term Loan (1M USD LIBOR+7.00%), 11.67% Cash, 11/19/2026 
11/19/2021 
$9,000,000  
 8,927,326  
 8,900,100  
 2.6%

LFR Chicken
    LLC (h) 
Restaurant 
Series
    B Preferred Units 
11/19/2021 
 497,183  
 1,000,000  
 1,177,373  
 0.3%

TMAC Acquisition Co., LLC 
Restaurant 
Unsecured Term Loan 8.00% PIK, 3/1/2024 
3/1/2018 
$3,217,657  
 3,217,657  
 2,881,888  
 0.8%

  
  
Total
    Restaurant 
  
    
 25,051,847  
 24,826,161  
 7.1%

Pepper Palace, Inc. (d) 
Specialty Food Retailer 
First Lien Term Loan (3M USD LIBOR+6.25%), 11.22% Cash, 6/30/2026 
6/30/2021 
$33,490,000  
 33,255,863  
 24,410,861  
 7.0%

Pepper Palace, Inc. (j) 
Specialty Food Retailer 
Delayed Draw Term Loan (3M USD LIBOR+6.25%), 11.22% Cash, 6/30/2026 
6/30/2021 
$-  
 -  
 -  
 0.0%

Pepper Palace, Inc. (j) 
Specialty Food Retailer 
Revolving Credit Facility (3M USD LIBOR+6.25%), 11.22% Cash, 6/30/2026 
6/30/2021 
$-  
 -  
 -  
 0.0%

Pepper
    Palace, Inc. (h) 
Specialty
    Food Retailer 
Membership
    Interest 
6/30/2021 
 1,000,000  
 1,000,000  
 -  
 0.0%

  
  
Total
    Specialty Food Retailer 
  
    
 34,255,863  
 24,410,861  
 7.0%

 


F-26
 

 
Saratoga Investment Corp.

Consolidated Schedule
of Investments
February 28, 2023
 


Company(1) 
Industry 
Investment
    
    Interest Rate/ Maturity 
Original
    Acquisition
    Date 
Principal/
    Number of Shares  
Cost  
Fair

    Value (c)  
%
    of Net Assets 

ArbiterSports, LLC (d) 
Sports Management 
First Lien Term Loan (3M USD LIBOR+6.50%), 11.47% Cash, 2/21/2025 
2/21/2020 
$26,000,000  
 25,894,505  
 25,721,800  
 7.4%

ArbiterSports, LLC 
Sports Management 
Delayed Draw Term Loan (3M USD LIBOR+6.50%), 11.47% Cash, 2/21/2025 
2/21/2020 
$1,000,000  
 1,000,000  
 989,300  
 0.3%

  
  
Total
    Sports Management 
  
    
 26,894,505  
 26,711,100  
 7.7%

Avionte
    Holdings, LLC (h) 
Staffing
    Services 
Class
    A Units 
1/8/2014 
 100,000  
 100,000  
 2,079,325  
 0.6%

  
  
Total
    Staffing Services 
  
    
 100,000  
 2,079,325  
 0.6%

JDXpert 
Talent Acquisition Software 
First Lien Term Loan (3M USD LIBOR+8.50%), 13.47% Cash, 5/2/2027 
5/2/2022 
$6,000,000  
 5,947,780  
 6,045,000  
 1.7%

JDXpert (j) 
Talent Acquisition Software 
Delayed Draw Term Loan (3M USD LIBOR+8.50%), 13.47% Cash, 5/2/2027 
5/2/2022 
$-  
 -  
 -  
 0.0%

Jobvite, Inc. (d) 
Talent Acquisition Software 
First Lien Term Loan (3M USD TERM SOFR+8.00%), 12.89% Cash, 8/5/2028 
8/5/2022 
$20,000,000  
 19,857,613  
 19,954,000  
 5.8%

  
  
Total
    Talent Acquisition Software 
  
    
 25,805,393  
 25,999,000  
 7.5%

Sub
    Total Non-control/Non-affiliate investments 
  
  
  
    
 819,966,208  
 828,028,800  
 238.6% 

 


F-27
 

 Saratoga Investment Corp.

Consolidated Schedule
of Investments
February 28, 2023
 


Company(1) 
Industry 
Investment
    
Interest Rate/ Maturity 
Original

    Acquisition
 Date 
Principal/
    Number of Shares  
Cost  
Fair
    
Value (c)  
%
    of Net Assets 

Affiliate
    investments - 8.1% (b) 
  
  
  
   
   
   
  

ETU Holdings, Inc. (f) 
Corporate Education Software 
First Lien Term Loan (3M USD LIBOR+9.00%), 13.97% Cash, 8/18/2027 
8/18/2022 
$7,000,000  
 6,935,556  
 7,006,300  
 2.0%

ETU Holdings, Inc. (f) 
Corporate Education Software 
Second Lien Term Loan 15.00% PIK, 2/18/2028 
8/18/2022 
$5,282,563  
 5,235,433  
 5,175,327  
 1.5%

ETU
    Holdings, Inc. (f), (h) 
Corporate
    Education Software 
Series
    A-1 Preferred Stock 
8/18/2022 
 3,000,000  
 3,000,000  
 3,072,504  
 0.9%

  
  
Total
    Corporate Education Software 
  
    
 15,170,989  
 15,254,131  
 4.4%

Axero Holdings, LLC (f) 
Employee Collaboration Software 
First Lien Term Loan (3M USD TERM SOFR+8.00%), 13.04% Cash, 6/30/2026 
6/30/2021 
$5,500,000  
 5,460,448  
 5,513,200  
 1.6%

Axero Holdings, LLC (f) 
Employee Collaboration Software 
Delayed Draw Term Loan (3M USD TERM SOFR+8.00%), 13.04% Cash, 6/30/2026 
6/30/2021 
$1,100,000  
 1,090,883  
 1,102,640  
 0.3%

Axero Holdings, LLC (f), (j) 
Employee Collaboration Software 
Revolving Credit Facility (3M USD TERM SOFR+8.00%), 13.04% Cash, 6/30/2026 
2/3/2022 
$-  
 -  
 -  
 0.0%

Axero
    Holdings, LLC (f), (h) 
Employee
    Collaboration Software 
Series
    A Preferred Units 
6/30/2021 
 2,000,000  
 2,000,000  
 2,498,000  
 0.7%

Axero
    Holdings, LLC (f), (h) 
Employee
    Collaboration Software 
Series
    B Preferred Units 
6/30/2021 
 2,000,000  
 2,000,000  
 3,937,900  
 1.1%

  
  
Total
    Employee Collaboration Software 
  
    
 10,551,331  
 13,051,740  
 3.7%

Sub
    Total Affiliate investments 
  
  
  
    
 25,722,320  
 28,305,871  
 8.1%

 


F-28
 

 
Saratoga Investment Corp.

Consolidated Schedule
of Investments
February 28, 2023
 


Company(1) 
Industry 
Investment
    
Interest Rate/ Maturity 
Original

    Acquisition
 Date 
Principal/
    Number of Shares  
Cost  
Fair
    
Value (c)  
%
    of Net Assets 

Control
    investments - 33.6% (b) 
  
  
  
    
    
    
   

Netreo Holdings, LLC (g) 
IT Services 
First Lien Term Loan (3M USD LIBOR +6.50%), 13.47% Cash/2.00% PIK 12/31/2025 
7/3/2018 
$5,539,029  
 5,522,608  
 5,443,757  
 1.6%

Netreo Holdings, LLC (d), (g) 
IT Services 
Delayed Draw Term Loan (3M USD LIBOR +6.50%), 13.47% Cash/2.00% PIK, 12/31/2025 
5/26/2020 
$22,111,008  
 22,019,877  
 21,730,699  
 6.3%

Netreo
    Holdings, LLC (g), (h) 
IT
    Services 
Common
    Stock Class A Unit 
7/3/2018 
 4,600,677  
 8,344,500  
 16,992,742  
 4.9%

  
  
Total
    IT Services 
  
    
 35,886,985  
 44,167,198  
 12.8%

Saratoga Investment Corp. CLO 2013-1, Ltd. (a), (e), (g) 
Structured Finance Securities 
Other/Structured Finance Securities 0.00%, 4/20/2033 
1/22/2008 
$111,000,000  
 28,943,904  
 21,176,578  
 6.1%

Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-2-R-3 Note (a), (g) 
Structured Finance Securities 
Other/Structured Finance Securities (3M USD LIBOR+10.00%), 14.97%, 4/20/2033 
8/9/2021 
$9,375,000  
 9,375,000  
 8,831,406  
 2.5%

Saratoga Investment Corp. Senior Loan Fund 2022-1, Ltd. Class E Note (a), (g) 
Structured Finance Securities 
Other/Structured Finance Securities (3M USD TERM SOFR+8.55%), 13.44%, 10/20/2033 
10/28/2022 
$12,250,000  
 11,392,500  
 11,354,495  
 3.3%

  
  
Total
    Structured Finance Securities 
  
    
 49,711,404  
 41,362,479  
 11.9%

Saratoga Senior Loan Fund I JV, LLC (a), (g), (j) 
Investment Fund 
Unsecured Loan 10.00%, 6/15/2023 
2/17/2022 
$17,618,954  
 17,618,954  
 17,618,954  
 5.1%

Saratoga
    Senior Loan Fund I JV, LLC (a), (g), (h) 
Investment
    Fund 
Membership
    Interest 
2/17/2022 
 17,583,486  
 17,583,486  
 13,106,951  
 3.8%

  
  
Total
    Investment Fund 
  
    
 35,202,440  
 30,725,905  
 8.9%

Sub
    Total Control investments 
  
  
  
    
 120,800,829  
 116,255,582  
 33.6%

TOTAL
    INVESTMENTS - 280.3% (b) 
  
  
  
    
$966,489,357  
$972,590,253  
 280.3%

 


F-29
 

 
Saratoga Investment Corp.

Consolidated Schedule
of Investments
February 28, 2023
 


  
Number of
 Shares  
Cost  
Fair Value  
% of Net Assets 

Cash and cash equivalents and cash and cash equivalents, reserve accounts - 27.7% (b) 
   
   
   
  

U.S. Bank Money Market (l) 
 96,076,273  
$96,076,273  
$96,076,273  
 27.7%

Total cash and cash equivalents and cash and cash equivalents, reserve accounts 
 96,076,273  
$96,076,273  
$96,076,273  
 27.7%

 

(1)Securities are exempt from registration under Rule 144A of
the Securities Act of 1933, as amended, and are restricted securities. Money market funds are valued at net asset value and are considered level 1 investments within the fair value
hierarchy.

 

(a)Represents an investment that is not a “qualifying asset”
under Section 55(a) of the Investment Company Act of 1940, as amended (the 1940 Act”). As of February 28, 2023, non-qualifying assets
represent 8.6% of the Company’s portfolio at fair value. As a BDC, the Company generally has to invest at least 70% of its total assets
in qualifying assets.

 

(b)Percentages are based on net assets of $346,958,042 as of
February 28, 2023.

 

(c)Because there is no “readily available market quotations”
(as defined in the 1940 Act) for these investments, the fair values of these investments were determined using significant unobservable
inputs and approved in good faith by our board of directors. These investments have been included as Level 3 in the Fair Value Hierarchy
(see Note 3 to the consolidated financial statements).

 

(d)These securities are either fully or partially pledged as
collateral under the Company’s senior secured revolving credit facility (see Note 8 to the consolidated financial statements).

 

(e)This investment does not have a stated interest rate that
is payable thereon. As a result, the 0.00% interest rate in the table above represents the effective interest rate currently earned on
the investment cost and is based on the current cash interest and other income generated by the investment.

 

(f)As defined in the 1940 Act, this portfolio company is an
“affiliate” as we own between 5.0% and 25.0% of the outstanding voting securities. Artemis Wax Corp. is no longer an affiliate
as of February 28, 2023. Transactions during the nine monthsyear ended February 28, 2023 in which the issuer was an affiliate are as
follows:

 


Company 
Purchases  
Sales  
Total
 Interest from
 Investments  
Management
 Fee Income  
Net Realized  Gain (Loss)
 from Investments  
Net Change
 in Unrealized
 Appreciation
 (Depreciation) 

Artemis Wax Corp 
$27,440,000  
$6,162,526  
$3,418,378  
$          -  
$         -  
$(1,460,287)

Axero Holdings, LLC 
 1,089,000  
 -  
 848,422  
 -  
 -  
 1,951,499 

ETU Holdings, Inc. 
 14,880,000  
 -  
 923,437  
 -  
 -  
 83,142 

Total 
$43,409,000  
$6,162,526  
$5,190,237  
$-  
$-  
$574,354 

 


F-30
 

 
Saratoga Investment Corp.

Consolidated Schedule
of Investments
February 28, 2023
 


(g)As defined in the 1940 Act, we “control” this portfolio
company because we own more than 25% of the portfolio company’s outstanding voting securities. Transactions during the year ended February
28, 2023 in which the issuer was both an affiliate and a portfolio company that we control are as follows:


 


Company 
Purchases  
Sales  
Total
 Interest from
 Investments  
Management
 Fee Income  
Net Realized  Gain (Loss)
 from Investments  
Net Change
 in Unrealized
 Appreciation
 (Depreciation) 

Netreo Holdings, LLC 
$8,290,000  
$     -  
$2,529,483  
$-  
$        -  
$(2,363,302)

Saratoga Investment Corp. CLO 2013-1, Ltd. 
 -  
 -  
 1,228,486  
 3,269,820  
 -  
 (4,149,106)

Saratoga Investment Corp. Senior Loan Fund 2022-1, Ltd. Class E Note 
 11,392,500  
 -  
 552,330  
 -  
 -  
 (38,005)

Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-2-R-3 Note 
 -  
 -  
 1,195,662  
 -  
 -  
 (543,594)

Saratoga Senior Loan Fund I JV, LLC 
 4,493,954  
 -  
 1,483,522  
 -  
 -  
 - 

Saratoga Senior Loan Fund I JV, LLC 
 4,458,486  
 -  
 -  
 -  
 -  
 (3,367,599)

Total 
$28,634,940  
$-  
$6,989,483  
$3,269,820  
$-  
$(10,461,606)

 

(h)Non-income producing at February 28, 2023.

 

(i)Includes securities issued by an affiliate of the company.

 

(j)All or a portion of this investment has an unfunded commitment
as of February 28, 2023. (See Note 9 to the consolidated financial statements).

 

(k)As of February 28, 2023, the investment was on non-accrual
status. The fair value of these investments was approximately $9.8 million, which represented 2.8% of the Company’s portfolio (see Note
2 to the consolidated financial statements).

 

(l)Included within cash and cash equivalents and cash and cash
equivalents, reserve accounts in the Company’s consolidated statements of assets and liabilities as of February 28, 2023.

 
BSBY - Bloomberg Short-Term Bank Yield
LIBOR - London Interbank Offered Rate
SOFR - Secured Overnight Financing Rate
 
1M USD BSBY - The 1 month USD BSBY rate
as of February 28, 2023 was 4.58%.
3M USD BSBY - The 3 month USD BSBY rate
as of February 28, 2023 was 4.87%.
1M USD LIBOR - The 1 month USD LIBOR rate
as of February 28, 2023 was 4.67%.
3M USD LIBOR - The 3 month USD LIBOR rate
as of February 28, 2023 was 4.97%.
1M USD TERM SOFR - The 1 month USD TERM
SOFR rate as of February 28, 2023 was 4.66%
3M USD TERM SOFR - The 3 month USD TERM
SOFR rate as of February 28, 2023 was 4.89%
PIK - Payment-in-Kind (see Note 2 to the
consolidated financial statements).
 
See accompanying notes to consolidated financial statements.
 


F-31
 

 
SARATOGA INVESTMENT
CORP.
 
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
 
February 29,
2024
 
Note 1. Organization
 
Saratoga Investment Corp. (the “Company”,
“we”, “our” and “us”) is a non-diversified closed end management investment company incorporated in
Maryland that has elected to be treated and is regulated as a business development company (“BDC”) under the Investment Company
Act of 1940, as amended (the “1940 Act”). The Company commenced operations on March 23, 2007 as GSC Investment Corp. and completed
the initial public offering (“IPO”) on March 28, 2007. The Company has elected, and intends to qualify annually, to be treated
for U.S. federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue
Code of 1986, as amended (the “Code”). The Company’s investment objective is to generate current income and, to a lesser
extent, capital appreciation from its investments.
 
GSC Investment, LLC (the “LLC”) was
organized in May 2006 as a Maryland limited liability company. On March 21, 2007, the Company was incorporated and concurrently therewith
the LLC was merged with and into the Company, with the Company as the surviving entity, in accordance with the procedure for such merger
in the LLC’s limited liability company agreement and Maryland law. In connection with such merger, each outstanding limited liability
company interest of the LLC was converted into a share of common stock of the Company.
 
On July 30, 2010, the Company changed its name
from “GSC Investment Corp.” to “Saratoga Investment Corp.” in connection with the consummation of a recapitalization
transaction.
 
The Company is externally managed and advised
by the investment adviser, Saratoga Investment Advisors, LLC (the “Manager” or “Saratoga Investment Advisors”),
pursuant to an investment advisory and management agreement (the “Management Agreement”).
 
The
Company has established wholly owned subsidiaries, SIA-AAP, Inc., SIA-ARC, Inc., SIA-Avionte, Inc., SIA-AX, Inc., SIA-G4, Inc., SIA-GH,
Inc., SIA-MAC, Inc., SIA-MDP, Inc., SIA-PP Inc., SIA-SZ, Inc., SIA-TG, Inc., SIA-TT, Inc., SIA-Vector, Inc. and SIA-VR, Inc., which are
structured as Delaware entities that are treated as corporations for U.S. federal income tax purposes and are intended to facilitate its
compliance with the requirements to be treated as a RIC under the Code by holding equity or equity-like investments in portfolio companies
organized as limited liability companies, or LLCs (or other forms of pass through entities). These entities are consolidated for accounting
purposes, but are not consolidated for U.S. federal income tax purposes and may incur U.S. federal income tax expenses as a result of
their ownership of portfolio companies. In February 2022, SIA-GH, Inc., SIA-TT Inc. and SIA-VR, Inc. received an approved plan of liquidation
following the sale of equity held by each of the portfolio companies.  
 
Our wholly owned subsidiaries, Saratoga Investment
Corp. SBIC LP (“SBIC LP”), Saratoga Investment Corp. SBIC II LP (“SBIC II LP”), and Saratoga Investment Corp.
SBIC III LP (“SBIC III LP”, and together with SBIC LP and SBIC II LP, the “SBIC Subsidiaries”), received SBIC
licenses from the SBA on March 28, 2012, August 14, 2019, and September 29, 2022, respectively. SBIC LP’s license provided up to
$150.0 million in additional long-term capital in the form of SBA debentures, while SBIC II LP’s and SBIC III LP’s SBIC licenses
provide up to $175.0 million each. Under current SBIC regulations, for two or more SBICs under common control, the maximum amount of outstanding
SBA debentures cannot exceed $350.0 million with at least $175.0 million in combined regulatory capital. Following the debentures being
fully repaid to the SBA, SBIC LP surrendered its license on January 3, 2024, providing the Company access to all undistributed capital
of SBIC LP, and SBIC LP subsequently merged with and into the Company.  



F-32
 

 
The Company has formed a wholly owned special
purpose entity, Saratoga Investment Funding II LLC (“SIF II”), a Delaware limited liability company, for the purpose of entering
into the senior secured revolving credit facility with Encina Lender Finance, LLC (the “Lender”), supported by loans held
by SIF II and pledged to the Lender under the credit facility (the “Encina Credit Facility”).
 
On October 26, 2021, the Company and TJHA JV I
LLC (“TJHA”) entered into a Limited Liability Company Agreement to co-manage Saratoga Senior Loan Fund I JV LLC (“SLF
JV”). SLF JV is under joint control and is not consolidated. SLF JV is invested in Saratoga Investment Corp Senior Loan Fund 2022-1
Ltd. (“SLF 2022”), which is a wholly owned subsidiary of SLF JV. SLF 2022 was formed for the purpose of making investments
in a diversified portfolio of broadly syndicated first lien and second lien term loans or bonds in the primary and secondary markets.
On October 28, 2022, SLF 2022 issued $402.1 million of debt (the “2022 JV CLO Notes”) through a collateralized loan obligation
trust (the “JV CLO trust”). The 2022 JV CLO Notes were issued pursuant to an indenture, dated October 28, 2022 (the “JV
Indenture”), with U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association) (the
“Trustee”) servicing as the trustee.
 
Note 2. Summary of Significant Accounting Policies
 
Basis of Presentation 
 
The accompanying consolidated financial statements
have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”),
are stated in U.S. Dollars and include the accounts of the Company and its wholly owned special purpose financing subsidiaries, Saratoga
Investment Funding, LLC (previously known as GSC Investment Funding LLC), SIF II, SBIC LP, SBIC II LP, SBIC III LP, SIA-AAP, Inc., SIA-ARC,
Inc., SIA-Avionte, Inc., SIA-AX, Inc., SIA-G4, Inc., SIA-GH, Inc., SIA-MDP, Inc., SIA-MAC, Inc., SIA-PP, Inc., SIA-SZ, Inc., SIA-TG, Inc.,
SIA-TT Inc., SIA-Vector, Inc. and SIA-VR, Inc. All intercompany accounts and transactions have been eliminated in consolidation. All references
made to the “Company,” “we,” and “us” herein include Saratoga Investment Corp. and its consolidated
subsidiaries, except as stated otherwise.
 
The Company, SBIC LP, SBIC II LP, and SBIC III
LP are all considered to be investment companies for financial reporting purposes and have applied the guidance in the Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services — Investment
Companies (“ASC 946”). There have been no changes to the Company, SBIC LP, SBIC II LP, or SBIC III LP’s status as
investment companies during the year ended February 29, 2024.
 
Principles of Consolidation
 
Under the investment company rules and regulations
pursuant to ASC 946, the Company is precluded from consolidating any entity other than another investment company or controlled operating
company whose business consists of providing services to the Company.  As a result, the consolidated financial statements of the
Company include only the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been
eliminated in consolidation.
 
The Company has determined that SLF JV is an investment
company under ASC 946; however, in accordance with such guidance the Company will generally not consolidate its investment in a company
other than a wholly owned investment company subsidiary. SLF JV is not a wholly owned investment company subsidiary as the Company and
TJHA each have an equal 50% voting interest in SLF JV and thus neither party has a controlling financial interest. Furthermore, FASB ASC
Topic 810, Consolidation, concludes that in a joint venture where both members have equal decision making authority, it is not
appropriate for one member to consolidate the joint venture since neither has control. Accordingly, the Company does not consolidate its
investment in SLF JV.
 
Use of Estimates in the Preparation of Financial Statements
 
The preparation of the accompanying consolidated
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and income, gains
(losses) and expenses during the period reported. Actual results could differ materially from those estimates. 



F-33
 

 
Operating Segment
 
The Company invests in various industries. The
Company separately evaluates the performance of each of its investment relationships. However, because each of these investment relationships
has similar business and economic characteristics, they have been aggregated into a single investment segment. All applicable segment
disclosures are included in or can be derived from the Company’s consolidated financial statements (See “Note 3. Investments”).
 
Cash and Cash Equivalents
 
Cash and cash equivalents include short-term,
liquid investments in a money market fund. The Company places its cash in financial institutions and, at times, such balances may be in
excess of the Federal Deposit Insurance Corporation insurance limits. Cash and cash equivalents are carried at cost which approximates
fair value. Pursuant to Section 12(d)(1)(A) of the 1940 Act, the Company may not invest in another investment company, such as a money
market fund, if such investment would cause the Company to:
 

●own
more than 3.0% of the investment company’s total outstanding voting stock;

 

●hold
securities in the investment company having an aggregate value in excess of 5.0% of the value of the Company’s total assets; or

 

●hold
securities in investment companies having an aggregate value in excess of 10.0% of the value of the Company’s total assets.

 
As of February 29, 2024, the Company did not exceed
any of these limitations.
 
Cash and Cash Equivalents, Reserve Accounts
 
Cash and cash equivalents, reserve accounts include
amounts held in designated bank accounts in the form of cash and short-term liquid investments in money market funds, and, at times, such
balances may be in excess of the Federal Deposit Insurance Corporation insurance limits, representing payments received on secured investments
or other reserved amounts associated with the Encina Credit Facility held by the Company’s wholly owned subsidiary, SIF II. The
Company is required to use these amounts to pay interest expense, reduce borrowings, or pay other amounts in accordance with the terms
of the Encina Credit Facility.
 
In addition, cash and cash equivalents, reserve
accounts also include amounts held in designated bank accounts, in the form of cash and short-term liquid investments in money market
funds, within the Company’s wholly owned subsidiaries, SBIC LP, SBIC II LP and SBIC III LP.
 
The statements of cash flows explain the change
during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents
when reconciling the beginning-of-period and end-of-period total amounts.
 
The following table provides a reconciliation
of cash and cash equivalents and cash and cash equivalents, reserve accounts reported within the consolidated statements of assets and
liabilities that sum to the total of the same such amounts shown in the consolidated statements of cash flows:
 


  
February 29, 
2024  
February 28, 
2023  
February 28, 
2022 

Cash and cash equivalents 
$8,692,846  
$65,746,494  
$47,257,801 

Cash and cash equivalents, reserve accounts 
 31,814,278  
 30,329,779  
 5,612,541 

Total cash and cash equivalents and cash and cash equivalents, reserve accounts 
$40,507,124  
$96,076,273  
$52,870,342 

 
Investment Classification
 
The Company classifies its investments in accordance
with the requirements of the 1940 Act. Under the 1940 Act, “control investments” are defined as investments in companies in
which the Company owns more than 25.0% of the voting securities or maintains greater than 50.0% of the board representation. Under the
1940 Act, “affiliated investments” are defined as those non-control investments in companies in which the Company owns between
5.0% and 25.0% of the voting securities. Under the 1940 Act, “non-affiliated investments” are defined as investments that
are neither control investments nor affiliated investments. 



F-34
 

 
Investment Valuation
 
The Company accounts for its investments at fair
value in accordance with the FASB ASC Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value, establishes
a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and
enhances disclosure requirements for fair value measurements. ASC 820 requires the Company to assume that its investments are to be sold
or its liabilities are to be transferred at the measurement date in the principal market to independent market participants, or in the
absence of a principal market, in the most advantageous market, which may be a hypothetical market. Market participants are defined as
buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.
 
Investments for which market quotations are readily
available are fair valued at such market quotations obtained from independent third-party pricing services and market makers subject to
any decision by the Company’s board of directors to approve a fair value determination to reflect significant events affecting the
value of these investments. The Company values investments for which market quotations are not readily available at fair value as approved,
in good faith, by the Company’s board of directors based on input from the Manager, the audit committee of the board of directors
and a third-party independent valuation firm.
 
The Company undertakes a multi-step valuation
process each quarter when valuing investments for which market quotations are not readily available, as described below:
 

●Each
investment is initially valued by the responsible investment professionals of the Manager and preliminary valuation conclusions are documented,
reviewed and discussed with our senior management; and

 

●An
independent valuation firm engaged by the Company’s board of directors independently reviews a selection of these preliminary valuations
each quarter so that the valuation of each investment for which market quotes are not readily available is reviewed by the independent
valuation firm at least once each fiscal year. The Company uses a third-party independent valuation firm to value its investment in the
subordinated notes of Saratoga Investment Corp. CLO 2013-1, Ltd. (“Saratoga CLO”), the Class F-2-R-3 Notes of the Saratoga
CLO, and the Class E Notes of the SLF 2022 every quarter.

 
In addition, all investments are subject to the
following valuation process:
 

●The
audit committee of the Company’s board of directors reviews and approves each preliminary valuation and the Manager and independent
valuation firm (if applicable) will supplement the preliminary valuation to reflect any comments provided by the audit committee; and

 

●The
Company’s board of directors discusses the valuations and approves the fair value of each investment, in good faith, based on the
input of the Manager, independent valuation firm (to the extent applicable) and the audit committee of the board of directors.

 
The Company uses multiple techniques for determining
fair value based on the nature of the investment and experience with those types of investments and specific portfolio companies. The
selections of the valuation techniques and the inputs and assumptions used within those techniques often require subjective judgements
and estimates. These techniques include market comparables, discounted cash flows and enterprise value waterfalls. Fair value is best
expressed as a range of values from which the Company determines a single best estimate. The types of inputs and assumptions that may
be considered in determining the range of values of the Company’s investments include the nature and realizable value of any collateral,
the portfolio company’s ability to make payments, market yield trend analysis and volatility in future interest rates, call and
put features, the markets in which the portfolio company does business, comparison to publicly traded companies, discounted cash flows
and other relevant factors. 



F-35
 

 

 
The Company’s investments in the subordinated
notes of Saratoga CLO, Class F-2-R-3 Notes of the Saratoga CLO and the Class E Notes of SLF 2022 are carried at fair value, which is based
on a discounted cash flow valuation technique that utilizes prepayment, re-investment and loss inputs based on historical experience and
projected performance, economic factors, the characteristics of the underlying cash flow, and comparable yields for equity interests in
collateralized loan obligation funds, when available, as determined by the Manager and recommended to the Company’s board of directors.
Specifically, the Company uses Intex cash flows, or an appropriate substitute, to form the basis for the valuation of its investment in
the subordinated notes of Saratoga CLO, Class F-2-R-3 Notes of the Saratoga CLO and the Class E Notes of SLF 2022. The inputs are based
on available market data and projections provided by third parties as well as management estimates. The Company uses the output from the
Intex models (i.e., the estimated cash flows) to perform a discounted cash flow analysis on expected future cash flows to determine the
valuation for our investment in Saratoga CLO. 
 
The Company’s equity investment in SLF JV
is measured using the proportionate share of the net asset value (“NAV”), or equivalent, of SLF JV as a practical expedient
for fair value, provided by ASC 820. The Company’s unsecured loan investment in SLF JV is based on a discounted cash flow valuation technique.
 
Because such valuations, and particularly valuations
of private investments and private companies, are inherently uncertain, they may fluctuate over short periods of time and may be based
on estimates. The determination of fair value may differ materially from the values that would have been used if a ready market for these
investments existed. The Company’s NAV could be materially affected if the determinations regarding the fair value of its investments
were materially higher or lower than the values that the Company ultimately realizes upon the disposal of such investments.
 
Rule 2a-5 under the 1940 Act (“Rule 2a-5”)
establishes a regulatory framework for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits boards of
directors, subject to board oversight and certain other conditions, to designate the investment adviser to perform fair value determinations.
Rule 2a-5 also defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining
whether a fund must determine the fair value of a security. Rule 31a-4 under the 1940 Act (“Rule 31a-4”) provides for certain
recordkeeping requirements associated with fair value determinations. Finally, the Securities and Exchange Commission (the “SEC”)
rescinded previously issued guidance on related issues, including the role of the board in determining fair value and the accounting and
auditing of fund investments. While the Company’s board of directors has not elected to designate Saratoga Investment Advisors as
the valuation designee, the Company has established policies and procedures in compliance with the applicable requirements of Rule 2a-5
and Rule 31a-4.
 
Derivative Financial Instruments
 
The Company accounts for derivative financial
instruments in accordance with FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”). ASC 815 requires recognizing
all derivative instruments as either assets or liabilities on the consolidated statements of assets and liabilities at fair value. The
Company values derivative contracts at the closing fair value provided by the counterparty. Changes in the values of derivative contracts
are included in the consolidated statements of operations.
 
Investment Transactions and Income Recognition
 
Purchases and sales of investments and the related
realized gains or losses are recorded on a trade-date basis. Interest income, adjusted for amortization of premium and accretion of discount,
is recorded on an accrual basis to the extent that such amounts are expected to be collected. The Company stops accruing interest on its
investments when it is determined that interest is no longer collectible. Discounts and premiums on investments purchased are accreted/amortized
using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts
over the life of the investment and amortization of premiums on investments up to the earliest call date.
 
Loans are generally placed on non-accrual status
when there is reasonable doubt that principal or interest will be collected. Accrued interest is generally reserved when a loan is placed
on non-accrual status. Interest payments received on non-accrual loans may be recognized as a reduction in principal depending upon management’s
judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid and,
in management’s judgment, are likely to remain current, although management may make exceptions to this general rule if the loan has sufficient
collateral value and is in the process of collection. At February 29, 2024 our investment in three portfolio companies were on non-accrual status
with a fair value of approximately $18.9 million, or 1.7% of the fair value of our portfolio. At February 28, 2023, our investment
in one portfolio company was on non-accrual status with a fair value of approximately $9.8 million, or 1.0% of the fair value of our portfolio. 


F-36
 


 
Interest income on our investment in the
subordinated note of Saratoga CLO is recorded using the effective interest method in accordance with the provisions of ASC Topic
325-40, Investments-Other, Beneficial Interests in Securitized Financial Assets, based on the anticipated yield and the
estimated cash flows over the projected life of the investment. Yields are revised when there are changes in actual or estimated
cash flows due to changes in prepayments and/or re-investments, credit losses or asset pricing. Changes in estimated yield are
recognized as an adjustment to the estimated yield over the remaining life of the investment from the date the estimated yield was
changed.
 
Payment-in-Kind Interest
 
The Company holds debt and preferred equity investments
in its portfolio that contain a payment-in-kind (“PIK”) interest provision. The PIK interest, which represents contractually
deferred interest added to the investment balance that is generally due at maturity, is generally recorded on an accrual basis to the
extent such amounts are expected to be collected. The Company stops accruing PIK interest if it is expected that the issuer will not be
able to pay all principal and interest when due. The Company restores to accrual status when past due principal and interest is paid and,
in management’s judgment, are likely to remain current, although management may make exceptions to this general rule if the loan has sufficient
collateral value and is in the process of collection.
 
Dividend Income 
 
Dividend income is recorded in the consolidated
statements of operations when earned.
 
Structuring and Advisory Fee Income 
 
Structuring and advisory fee income represents
various fee income earned and received for performing certain investment structuring and advisory activities during the closing of new
investments.
 
Other Income
 
Other income includes prepayment income fees,
and monitoring, administration, redemption and amendment fees and is recorded in the consolidated statements of operations when earned.
 
Deferred Debt Financing Costs
 
Financing costs incurred in connection with our
credit facility and notes are deferred and amortized using the straight-line method over the life of the respective facility and debt
securities. Financing costs incurred in connection with the SBA debentures of SBIC LP, SBIC II LP, and SBIC III LP are deferred and amortized
using the straight-line method over the life of the debentures. Any discount or premium on the issuance of any debt is accreted and amortized
using the effective interest method over the life of the respective debt security.
 
The Company presents deferred debt financing costs
on the balance sheet as a contra-liability, which is a direct deduction from the carrying amount of that debt liability, consistent with
debt discounts.
 
Realized Loss on Extinguishment of Debt 
 
Upon the repayment of debt obligations that are
deemed to be extinguishments, the difference between the principal amount due at maturity adjusted for any unamortized debt issuance costs
is recognized as a loss (i.e., the unamortized debt issuance costs are recognized as a loss upon extinguishment of the underlying debt
obligation). 



F-37
 

 
Contingencies
 
In the ordinary course of business, the Company
may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution
of these provisions against the Company. Based on its history and experience, management reasonably believes that the likelihood of such
an event is remote. Therefore, the Company has not accrued any liabilities in connection with such indemnifications.
 
In the ordinary course of business, the Company
may directly or indirectly be a defendant or plaintiff in legal actions with respect to bankruptcy, insolvency or other types of proceedings.
Such lawsuits may involve claims that could adversely affect the value of certain financial instruments owned by the Company.
 
Income Taxes
 
The Company has elected, and intends to qualify
annually, to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code. By meeting these requirements, the
Company generally will not be subject to U.S. federal income tax on ordinary income or capital gains timely distributed to stockholders.
Therefore, no provision has been recorded for federal income taxes, except as related to the Corporate Blockers (as defined below) and
long-term capital gains, when applicable.
 
In order to qualify as a RIC, among other requirements,
the Company generally is required to timely distribute to its stockholders at least 90% of its “investment company taxable income”,
as defined by the Code, for each fiscal tax year. The Company will be subject to U.S. federal income tax imposed at corporate rates on
its investment company taxable income and net capital gains that it does not timely distribute to shareholders. The Company will be subject
to a non-deductible U.S. federal excise tax of 4% on undistributed income if it does not distribute at least (1) 98% of its net ordinary
income in any calendar year, (2) 98.2% of its capital gain net income for each one-year period ending on October 31and (3) any net ordinary
income and capital gain net income that it recognized for preceding years, but were not distributed during such year, and on which the
Company paid no U.S federal income tax.
  
Depending on the level of investment company taxable
income earned in a tax year and the amount of net capital gains recognized in such tax year, the Company may choose to carry forward investment
company taxable income and net capital gains in excess of current year dividend distributions into the next tax year and pay U.S. federal
income tax, and possibly the 4% U.S. federal excise tax on such income, as required. To the extent that the Company determines that its
estimated current year annual investment company taxable income will be in excess of estimated current year dividend distributions for
U.S. federal excise tax purposes, the Company accrues the U.S. federal excise tax, if any, on estimated excess taxable income as taxable
income is earned. For the years ended February 29, 2024, 2023 and 2022, the excise tax accrual on estimated excess taxable income was
$1.8 million, $1.1 million and $0.6 million, respectively.
 
In accordance with U.S. Treasury regulations and
published guidance issued by the Internal Revenue Service (“IRS”), a publicly offered RIC may treat a distribution of its
own stock as counting toward its RIC distribution requirements if each stockholder may elect to receive his, her, or its entire distribution
in either cash or stock of the RIC. This published guidance indicates that the rule will apply where the aggregate amount of cash to be
distributed to all stockholders is not at least 20% of the aggregate declared distribution. Under the published guidance, if too
many stockholders elect to receive cash, the cash available for distribution must be allocated among the stockholders electing to
receive cash (with the balance of the distribution paid in stock). In no event will any stockholder, electing to receive cash, receive
less than 20% of his or her entire distribution in cash. If these and certain other requirements are met, for U.S. federal income tax
purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock.
 
The Company may utilize wholly owned holding companies
that are treated as corporations for U.S. federal income tax purposes when making equity investments in portfolio companies taxed as pass-through
entities to meet its source-of-income requirements as a RIC (“Corporate Blockers”). Corporate Blockers are consolidated in
the Company’s U.S. GAAP financial statements and may result in current and deferred U.S. federal and state income tax expense with
respect to income derived from those investments. Such income, net of applicable income taxes, is not included in the Company’s
tax-basis net investment income until distributed by the Corporate Blocker, which may result in timing and character differences between
the Company’s U.S. GAAP and tax-basis net investment income and realized gains and losses. Income tax expense or benefit from Corporate
Blockers related to net investment income are included in total operating expenses, while any expense or benefit related to federal or
state income tax originated for capital gains and losses are included together with the applicable net realized or unrealized gain or
loss line item. Deferred tax assets of the Corporate Blockers are reduced by a valuation allowance when, in the opinion of management, it
is more-likely than-not that some portion or all of the deferred tax assets will not be realized.  



F-38
 

 
FASB ASC Topic 740, Income Taxes,
(“ASC 740”), provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed
in the financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of
preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being
sustained by the applicable tax authority. Tax positions deemed to meet a “more-likely-than-not” threshold would be
recorded as a tax benefit or expense in the current period. The Company recognizes interest and penalties, if any, related to
unrecognized tax benefits as income tax expense on the consolidated statements of operations. During the fiscal year ended February
29, 2024, February 28, 2023 and February 28, 2022 the Company did not incur any interest or penalties. Although we file federal and
state tax returns, our major tax jurisdiction is federal. The 2020, 2021, 2022 and 2023 federal tax years for the Company remain
subject to examination by the IRS. At February 29, 2024, and February 28, 2023, there were no uncertain tax positions. The Company
is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will
change significantly in the next 12 months.
 
Dividends
 
Dividends to common stockholders are recorded
on the ex-dividend date. The amount to be paid out as a dividend is determined by the board of directors. Net realized capital gains,
if any, are generally distributed at least annually, although we may decide to retain some or all of our net capital gains for reinvestment.
 
We have adopted a dividend reinvestment plan (“DRIP”)
that provides for reinvestment of our dividend distributions on behalf of our stockholders unless a stockholder elects to receive cash.
As a result, if our board of directors authorizes, and we declare, a cash dividend, then our stockholders who have not “opted out”
of the DRIP by the dividend record date will have their cash dividends automatically reinvested into additional shares of our common stock,
rather than receiving the cash dividends. We have the option to satisfy the share requirements of the DRIP through the issuance of new
shares of common stock or through open market purchases of common stock by the DRIP plan administrator.
 
Capital Gains Incentive Fee
 
The Company records an expense accrual on the
consolidated statements of operations relating to the capital gains incentive fee payable to the Manager, as recorded on the consolidated
statements of assets and liabilities when the net realized and unrealized gain on its investments exceed all net realized and unrealized
capital losses on its investments, as a capital gains incentive fee would be owed to the Manager if the Company were to liquidate its
investment portfolio at such time.
 
The actual incentive fee payable to the Manager
related to capital gains will be determined and payable in arrears at the end of each fiscal year and only reflect those realized capital
gains net of realized and unrealized losses for the period.
 
Recent Accounting Pronouncements 
 
In June 2022, the FASB issued ASU 2022-03, Fair
Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820) (“ASU 2022-03”), which
clarifies that a contractual sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding
the equity security and is not included in the equity security’s unit of account. Accordingly, an entity should not consider the
contractual sale restriction when measuring the equity security’s fair value. In addition, ASU 2022-03 prohibits an entity from
recognizing a contractual sale restriction as a separate unit of account. ASU 2022-03 amendments are effective for fiscal years beginning
after December 15, 2023, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2022-03
on its consolidated financial statements.
 
In March 2020, the FASB issued ASU 2020-04,
Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”)
to provide optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial
reporting. ASU 2020-04 established Topic 848 to provide relief during the temporary transition period and includes a sunset provision
based on expectations of when the London Interbank Offered Rate (“LIBOR”) would cease being published. With the adoption of
ASU 2020-04, there was no significant impact to the Company’s financial position. 



F-39
 

 
In December 2023, the FASB issued ASU 2023-09, Improvements
to Income Tax Disclosures. The amendments in this update require more disaggregated information on income taxes paid. ASU 2023-09
is effective for years beginning after December 15, 2024. Early adoption is permitted, however the Company has not elected to adopt this
provision as of the date of the financial statements contained in this report. The Company is still assessing the impact of the new guidance.
However, it does not expect ASU 2023-09 to have a material impact on the consolidated financial statements and the notes thereto.
 
Risk Management
 
In the ordinary course of its business, the Company
manages a variety of risks, including market and credit risk. Market risk is the risk of potential adverse changes to the value of investments
because of changes in market conditions such as interest rate movements and volatility in investment prices.
 
Credit risk is the risk of default or non-performance
by portfolio companies, equivalent to the investment’s carrying amount. The Company is also exposed to credit risk related to maintaining
all of its cash and cash equivalents, including those in reserve accounts, at a major financial institution and credit risk related to
any of its derivative counterparties.
 
The Company has investments in lower rated and
comparable quality unrated high yield bonds and bank loans. Investments in high yield investments are accompanied by a greater degree
of credit risk. The risk of loss due to default by the issuer is significantly greater for holders of high yield securities, because such
investments are generally unsecured and are often subordinated to other creditors of the issuer.
  
Note 3. Investments
 
As noted above, the Company values all investments
in accordance with ASC 820. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between independent market participants at the measurement date.
 
ASC 820 establishes a hierarchal disclosure framework
which prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Market price
observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment.
Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally
will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
 
Based on the observability of the inputs used
in the valuation techniques, the Company is required to provide disclosures on fair value measurements according to the fair value hierarchy.
The fair value hierarchy ranks the observability of the inputs used to determine fair values. Investments carried at fair value are classified
and disclosed in one of the following three categories:
 


 
●
Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

 


 
●
Level 2— Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. Such inputs may be quoted prices for similar assets or liabilities, quoted markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full character of the financial instrument, or inputs that are derived principally from, or corroborated by, observable market information. Investments that are generally included in this category include illiquid debt securities and less liquid, privately held or restricted equity securities, for which some level of recent trading activity has been observed.
 



F-40
 

 


 
●
Level 3—Pricing inputs are unobservable for the investment and includes situations where there is little, if any, market activity for the investment. The inputs may be based on the Company’s own assumptions about how market participants would price the asset or liability or may use Level 2 inputs, as adjusted, to reflect specific investment attributes relative to a broader market assumption. Even if observable market data for comparable performance or valuation measures (earnings multiples, discount rates, other financial/valuation ratios, etc.) are available, such investments are grouped as Level 3 if any significant data point that is not also market observable (private company earnings, cash flows, etc.) is used in the valuation technique. We use multiple techniques for determining fair value based on the nature of the investment and experience with those types of investments and specific portfolio companies. The selections of the valuation techniques and the inputs and assumptions used within those techniques often require subjective judgements and estimates. These techniques include market comparables, discounted cash flows and enterprise value waterfalls. Fair value is best expressed as a range of values from which the Company determines a single best estimate. The types of inputs and assumptions that may be considered in determining the range of values of our investments include the nature and realizable value of any collateral, the portfolio company’s ability to make payments, market yield trend analysis and volatility in future interest rates, call and put features, the markets in which the portfolio company does business, comparison to publicly traded companies, discounted cash flows and other relevant factors.

 
In addition to using the above inputs in investment
valuations, the Company continues to employ the valuation policy approved by the board of directors that is consistent with ASC 820 and
the 1940 Act (see Note 2). Consistent with our valuation policy, the Company evaluates the source of inputs, including any markets in
which its investments are trading, in determining fair value.
 
The following table presents fair value measurements
of investments, by major class, as of February 29, 2024 (dollars in thousands), according to the fair value hierarchy:
 


  
Fair Value Measurements  
Valued Using Net Asset   
  

  
Level 1  
Level 2  
Level 3  
Value*  
Total 

First lien term loans 
$          -  
$     -  
$976,423  
$-  
$976,423 

Second lien term loans 
 -  
 -  
 18,097  
 -  
 18,097 

Unsecured loans 
 -  
 -  
 15,818  
 -  
 15,818 

Structured finance securities 
 -  
 -  
 30,626  
 -  
 30,626 

Equity interests 
 -  
 -  
 88,426  
 9,404  
 97,830 

Total 
$-  
$-  
$1,129,390  
$9,404  
$1,138,794 
 


 


*The Company’s equity investment in SLF JV is measured
using the proportionate share of the NAV, or equivalent, as a practical expedient and thus has not been classified in the fair value
hierarchy. The Company’s unsecured loan investment in SLF JV is based on a discounted cash flow valuation technique.

 
The following table presents fair value measurements of investments,
by major class, as of February 28, 2023 (dollars in thousands), according to the fair value hierarchy:
 


  
Fair Value Measurements  
Valued Using Net Asset  
  

  
Level 1  
Level 2  
Level 3  
Value*  
Total 

First lien term loans 
$      -  
$       -  
$798,534  
$-  
$798,534 

Second lien term loans 
 -  
 -  
 14,936  
 -  
 14,936 

Unsecured loans 
 -  
 -  
 20,661  
 -  
 20,661 

Structured finance securities 
 -  
 -  
 41,362  
 -  
 41,362 

Equity interests 
 -  
 -  
 83,990  
 13,107  
 97,097 

Total 
$-  
$-  
$959,483  
$13,107  
$972,590 
 


 


*The Company’s equity investment in SLF JV is measured
using the proportionate share of the NAV, or equivalent, as a practical expedient and thus has not been classified in the fair value
hierarchy. The Company’s unsecured loan investment in SLF JV is based on a discounted cash flow valuation technique.
 


F-41
 


 
The following table provides a reconciliation of the beginning
and ending balances for investments that use Level 3 inputs for the year ended February 29, 2024 (dollars in thousands):
 


  
First lien
 term loans  
Second lien
 term loans  
Unsecured
 term loans  
Structured
 finance
 securities  
Equity
 interests  
Total 

Balance as of February 28, 2023 
$798,534  
$14,936  
$20,661  
$41,362  
$83,990  
$959,483 

Payment-in-kind and other adjustments to cost 
 1,479  
 848  
 -  
 (6,941) 
 (296) 
 (4,910)

Net accretion of discount on investments 
 2,215  
 6  
 -  
 -  
 -  
 2,221 

Net change in unrealized appreciation (depreciation) on investments 
 (33,325) 
 2,307  
 (1,460) 
 (3,795) 
 (7,115) 
 (43,388)

Purchases 
 234,408  
 -  
 -  
 -  
 11,693  
 246,101 

Sales and repayments 
 (26,888) 
 -  
 (3,383) 
 -  
 -  
 (30,271)

Net realized gain (loss) from investments 
 -  
 -  
 -  
 -  
 154  
 154 

Balance as of February 29, 2024 
$976,423  
$18,097  
$15,818  
$30,626  
$88,426  
$1,129,390 

Net change in unrealized appreciation (depreciation) for the year relating to those Level 3 assets that  were still held by the Company at the end of the year 
$(33,307) 
$2,307  
$1,801  
$(3,795) 
$(7,115) 
$(40,109)

 
Purchases, PIK and other adjustments to cost
include purchases of new investments at cost, effects of refinancing/restructuring, accretion/amortization of income from
discount/premium on debt securities, and PIK interests.
 
Sales and repayments represent net proceeds received
from investments sold and principal paydowns received during the period.
 
Transfers and restructurings, if any, are recognized
at the beginning of the period in which they occur. There were no transfers or restructurings in or out of Levels 1, 2, or 3 during the
year ended February 29, 2024.
 
The
following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended
February 28, 2023 (dollars in thousands):
 


  
First lien
 term loans  
Second lien
 term loans  
Unsecured
 term loans  
Structured
 finance
 securities  
Equity
 interests  
Total 

Balance as of February 28, 2022 
$631,572  
$44,386  
$15,931  
$38,030  
$75,632  
$805,551 

Payment-in-kind and other adjustments to cost 
 391  
 283  
 238  
 (3,329) 
 535  
 (1,882)

Net accretion of discount on investments 
 1,831  
 (14) 
 -  
 -  
 -  
 1,817 

Net change in unrealized appreciation (depreciation) on investments 
 (10,465) 
 (703) 
 (167) 
 (4,731) 
 4,215  
 (11,851)

Purchases 
 345,955  
 4,950  
 4,659  
 11,392  
 13,660  
 380,616 

Sales and repayments 
 (170,913) 
 (33,966) 
 -  
 -  
 (17,336) 
 (222,215)

Net realized gain (loss) from investments 
 163  
 -  
 -  
 -  
 7,284  
 7,447 

Balance as of February 28, 2023 
$798,534  
$14,936  
$20,661  
$41,362  
$83,990  
$959,483 

Net change in unrealized appreciation (depreciation) for the year relating to those Level 3 assets that  were still held by the Company at the end of the year 
$(10,575) 
$(892) 
$(167) 
$(4,731) 
$6,111  
$(10,254)
 



F-42
 

 
Transfers and restructurings, if any, are recognized
at the beginning of the period in which they occur. There were no transfers or restructurings in or out of Levels 1, 2, or 3 during the
year ended February 28, 2023
 
The valuation techniques and significant unobservable inputs
used in recurring Level 3 fair value measurements of assets as of February 29, 2024 were as follows (dollars in thousands):
 


  
Fair Value  
Valuation Technique 
Unobservable Input 
Range 
Weighted
 Average*

First lien term loans 
$976,423  
Market Comparables 
Market Yield (%) 
10.6%  - 17.2% 
13.0%

  
    
  
Revenue Multiples (x) 
4.6x - 9.4x 
6.6x

  
    
  
EBITDA Multiples (x) 
5.0x - 6.0x 
5.6x

  
    
  
Third-party bid (x) 
3.9x - 4.2x 
4.0x

Second lien term loans 
 18,097  
Market Comparables 
Market Yield (%) 
19.0% - 28.3% 
25.5%

  
    
  
EBITDA Multiples (x) 
7.0x 
7.0x

  
    
  
Third-party bid (x) 
29.7x 
29.7x

Unsecured term loans 
 15,818  
Discounted Cash Flow 
Discount Rate (%) 
10.5% 
10.5%

Structured finance securities 
 30,626  
Discounted Cash Flow 
Discount Rate (%) 
8.5% - 22.0% 
15.1%

  
    
  
Recovery Rate (%) 
35.0% - 70.0% 
70.0%

  
    
  
Prepayment Rate (%) 
20.0% 
20.0%

Equity interests 
 88,426  
Enterprise Value Waterfall 
EBITDA Multiples (x) 
4.7x - 20.4x 
10.4x

  
    
  
Revenue Multiples (x) 
1.3x - 10.4x 
6.3x

  
    
  
Third-party bid (x) 
3.9x 
3.9x

Total 
$1,129,390  
  
  
  
 
 


 


*The weighted average in the table above is calculated based
on each investment’s fair value weighting, using the applicable unobservable input, excluding the recovery rate for Structured finance
securities.

 
The valuation techniques and significant unobservable inputs
used in recurring Level 3 fair value measurements of assets as of February 28, 2023 were as follows (dollars in thousands):
 


  
Fair Value  
Valuation Technique 
Unobservable Input 
Range 
Weighted
 Average*

First lien term loans 
$798,534  
Market Comparables 
Market Yield (%) 
10.5%  - 23.1% 
12.8%

  
    
  
Revenue Multiples (x) 
4.1x 
4.1x

  
    
  
EBITDA Multiples (x) 
8.0x 
8.0x

Second lien term loans 
 14,936  
Market Comparables 
Market Yield (%) 
15.6% - 61.8% 
45.8%

Unsecured term loans 
 20,661  
Market Comparables 
Market Yield (%) 
10.0% - 28.8% 
12.6%

  
    
Market Comparables 
Market Quote (%) 
100.0% 
100%

  
    
Collateral Value Coverage 
Net Asset Value (%) 
100.0% 
100%

Structured finance securities 
 41,362  
Discounted Cash Flow 
Discount Rate (%) 
12.0% - 22.0% 
17.6%

  
    
  
Recovery Rate (%) 
35.0% - 70.0% 
70.0%

  
    
  
Prepayment Rate (%) 
20.0% 
20.0%

Equity interests 
 83,990  
Enterprise Value Waterfall 
EBITDA Multiples (x) 
5.5x - 28.6x 
11.0x

  
    
  
Revenue Multiples (x) 
1.3x - 11.2x 
6.4x

Total 
$959,483  
  
  
  
 
 


 


*The weighted average in the table above is calculated based
on each investment’s fair value weighting, using the applicable unobservable input, excluding the recovery rate for Structured finance
securities.
 



F-43
 

 
For investments utilizing a market comparables
valuation technique, a significant increase (decrease) in the market yield, in isolation, would result in a significantly lower (higher)
fair value measurement, and a significant increase (decrease) in any of the earnings before interest, tax, depreciation and amortization
(“EBITDA”) or revenue valuation multiples, in isolation, would result in a significantly higher (lower) fair value measurement.
For investments utilizing a discounted cash flow valuation technique, a significant increase (decrease) in the discount rate, and prepayment
rate, in isolation, would result in a significantly lower (higher) fair value measurement while a significant increase (decrease) in recovery
rate, in isolation, would result in a significantly higher (lower) fair value measurement. For investments utilizing a market quote, third
party bid or net asset value in deriving a value, a significant increase (decrease) in the market quote, bid or net asset value in isolation,
would result in a significantly higher (lower) fair value measurement.
 
The composition of our investments as of February 29, 2024
at amortized cost and fair value was as follows (dollars in thousands):
 


  
Investments at Amortized Cost  
Amortized Cost Percentage of Total Portfolio  
Investments at Fair Value  
Fair Value Percentage of Total Portfolio 

First lien term loans 
$1,019,678  
 86.4% 
$976,423  
 85.7%

Second lien term loans 
 21,968  
 1.9  
 18,097  
 1.6 

Unsecured loans 
 17,619  
 1.5  
 15,818  
 1.4 

Structured finance securities 
 42,769  
 3.6  
 30,626  
 2.7 

Equity interests 
 77,750  
 6.6  
 97,830  
 8.6 

Total 
$1,179,784  
 100.0% 
$1,138,794  
 100.0%

 
The composition of our investments as of February 28, 2023 at amortized
cost and fair value was as follows (dollars in thousands):
 


  
Investments at
 Amortized
 Cost  
Amortized
 Cost
 Percentage
 of Total
 Portfolio  
Investments
 at 
Fair Value  
Fair Value
 Percentage
 of Total
 Portfolio 

First lien term loans 
$808,464  
 83.7% 
$798,534  
 82.1%

Second lien term loans 
 21,114  
 2.2  
 14,936  
 1.5 

Unsecured loans 
 21,001  
 2.2  
 20,661  
 2.1 

Structured finance securities 
 49,711  
 5.1  
 41,362  
 4.3 

Equity interests 
 66,199  
 6.8  
 97,097  
 10.0 

Total 
$966,489  
 100.0% 
$972,590  
 100.0%

 
For loans and debt securities for which market
quotations are not readily available, the Company determines their fair value based on third party indicative broker quotes, where available,
or the inputs that a hypothetical market participant would use to value the security in a current hypothetical sale using a market comparables
valuation technique. In applying the market comparables valuation technique, the Company determines the fair value based on such factors
as market participant inputs including synthetic credit ratings, estimated remaining life, current market yield and interest rate spreads
of similar securities as of the measurement date. If, in the Company’s judgment, the market comparables technique is not sufficient
or appropriate, the Company may use additional techniques such as an asset liquidation or expected recovery model.
 
For equity securities of portfolio companies and
partnership interests, the Company determines the fair value using an enterprise value waterfall valuation technique. Under the enterprise
value waterfall valuation technique, the Company determines the enterprise fair value of the portfolio company and then waterfalls the
enterprise value over the portfolio company’s securities in order of their preference relative to one another. To estimate the enterprise
value of the portfolio company, the Company weighs some or all of the traditional market valuation techniques and factors based on the
individual circumstances of the portfolio company in order to estimate the enterprise value. The techniques for performing investments
may be based on, among other things: valuations of comparable public companies, recent sales of private and public comparable companies,
discounting the forecasted cash flows of the portfolio company, third party valuations of the portfolio company, considering offers from
third parties to buy the company, estimating the value to potential strategic buyers and considering the value of recent investments in
the equity securities of the portfolio company. For non-performing investments, the Company may estimate the liquidation or collateral
value of the portfolio company’s assets and liabilities. The Company also takes into account historical and anticipated financial
results.  



F-44
 

 
The Company’s investments in Saratoga CLO
and SLF 2022 are carried at fair value, which is based on a discounted cash flow valuation technique that utilizes prepayment, re-investment
and loss inputs based on historical experience and projected performance, economic factors, the characteristics of the underlying cash
flow, and comparable yields for equity interests in collateralized loan obligation funds similar to Saratoga CLO and SLF 2022, when available,
as determined by the Manager and recommended to the Company’s board of directors. Specifically, the Company uses Intex cash flows,
or an appropriate substitute, to form the basis for the valuation of the investment in Saratoga CLO and SLF 2022. The cash flows use a
set of inputs including projected default rates, recovery rates, reinvestment rates and prepayment rates in order to arrive at estimated
valuations. The inputs are based on available market data and projections provided by third parties as well as management estimates. The
Company ran Intex models based on inputs about the refinanced Saratoga CLO’s structure and the SLF 2022 structure, including capital
structure, cost of liabilities and reinvestment period. The Company uses the output from the Intex models (i.e., the estimated cash flows)
to perform a discounted cash flow analysis on expected future cash flows to determine a valuation for our investments in Saratoga CLO
and SLF 2022 at February 29, 2024. The inputs at February 29, 2024 for the valuation model include:
 
    ● Default rate: 2.0% 
 


 
●
Recovery rate: 35%-70%

 


 
●
Discount rate: 8.5%-22.0%

 


 
●
Prepayment rate: 20.0%

 


 
●
Reinvestment rate / price: S+365bps / $99.00

 
Investment Concentration
 
Set forth is a brief description of each portfolio
company in which the fair value of the Company’s investment represents greater than 5% of the Company’s total assets as of
February 29, 2024, excluding Saratoga CLO, SLF JV and SLF 2022 (see Note 4 and Note 5 for more information on Saratoga CLO, SLF JV and
SLF 2022, respectively).
 
HemaTerra Holdings Company, LLC
 
HemaTerra Holding Company, LLC (“HemaTerra”)
provides SaaS-based software solutions addressing complex supply chain issues across a variety of medical environments, including blood,
plasma, tissue, implants and DNA sample management, to customers in blood centers, hospitals, pharmaceuticals, and law enforcement settings.
 
Artemis Wax Corp.
 
Artemis Wax Corporation is a U.S. based retail
aggregator of European Wax Center (“EWC”) franchise locations with a concentration in the northeast. Founded in 2004, EWC
is the largest U.S. body waxing national chain with more than 800 locations across the country.
 
Granite Comfort, LP 
 
Granite Comfort, LP is a U.S. based heating, ventilation
and air conditioning (“HVAC”) company. The company provides traditional service and replacement of HVAC / plumbing systems,
as well as a rental model that is in the early stages of implementation.
 
Note 4. Investment in Saratoga CLO
 
On January 22, 2008, the Company entered into
a collateral management agreement with Saratoga CLO, pursuant to which the Company acts as its collateral manager. The Saratoga CLO was
initially refinanced in October 2013 with its reinvestment period extended to October 2016. On November 15, 2016, the Company completed
a second refinancing of the Saratoga CLO with its reinvestment period extended to October 2018.
 
On December 14, 2018, the Company completed a
third refinancing and upsize of the Saratoga CLO (the “2013-1 Reset CLO Notes”). The third Saratoga CLO refinancing, among
other things, extended its reinvestment period to January 2021, and extended its legal maturity date to January 2030. Following this refinancing,
the Saratoga CLO portfolio increased its aggregate principal amount from approximately $300.0 million to approximately $500.0 million
of predominantly senior secured first lien term loans. 



F-45
 

 
On February 11, 2020, the Company entered into
an unsecured loan agreement (“CLO 2013-1 Warehouse 2 Loan”) with Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd. (“CLO
2013-1 Warehouse 2”), a wholly owned subsidiary of Saratoga CLO. During the fourth quarter ended February 28, 2021, the CLO 2013-1
Warehouse 2 Ltd. was repaid in full.
 
On February 26, 2021, the Company completed the
fourth refinancing of the Saratoga CLO. This refinancing, among other things, extended the Saratoga CLO reinvestment period to April 2024,
extended its legal maturity to April 2033, and added a non-call period of February 2022. In addition, and as part of the refinancing,
the Saratoga CLO was upsized from $500 million in assets to approximately $650 million. As part of this refinancing and upsizing, the
Company invested an additional $14.0 million in all of the newly issued subordinated notes of the Saratoga CLO, and purchased $17.9 million
in aggregate principal amount of the Class F-R-3 Notes tranche at par. Concurrently, the existing $2.5 million of Class F-R-2 Notes, $7.5
million of Class G-R-2 Notes and $25.0 million of the CLO 2013-1 Warehouse 2 Loan were repaid. The Company also paid $2.6 million of transaction
costs related to the refinancing and upsizing on behalf of the Saratoga CLO, to be reimbursed from future equity distributions. At August
31, 2021, the outstanding receivable of $2.6 million was repaid in full.
 
On August 9, 2021, the Company exchanged its existing
$17.9 million Class F-R-3 Note for $8.5 million Class F-1-R-3 Notes and $9.4 million Class F-2-R-3 Notes at par. On August 11, 2021, the
Company sold its Class F-1-R-3 Notes to third parties, resulting in a realized loss of $0.1 million.
 
The Saratoga CLO remains effectively 100.0% owned
and managed by the Company. The Company receives a base management fee of 0.10% per annum and a subordinated management fee of 0.40% per
annum of the outstanding principal amount of Saratoga CLO’s assets, paid quarterly to the extent of available proceeds. Following
the third refinancing and the issuance of the 2013-1 Reset CLO Notes on December 14, 2018, the Company is no longer entitled to an incentive
management fee equal to 20.0% of excess cash flow to the extent the Saratoga CLO subordinated notes receive an internal rate of return
paid in cash equal to or greater than 12.0%.
 
For the years ended February 29, 2024, February
28, 2023 and February 28, 2022, we accrued management fee income of $3.3 million, $3.3 million and $3.3 million, respectively, and interest
income of $0.0 million, $1.2 million and $4.9 million, respectively, from the Saratoga CLO.
 
As of February 29, 2024, the Company determined that the fair value
of its investment in the subordinated notes of Saratoga CLO was $9.5 million. As of February 29, 2024, the fair value of its investment
in the Class F-R-3 Notes of Saratoga CLO was $8.9 million. As of February 29, 2024, Saratoga CLO had investments with a principal balance
of $640.8 million and a weighted average spread over LIBOR of 3.8% and had debt with a principal balance of $611.0 million with a weighted
average spread over LIBOR of 2.2%. As of February 29, 2024, the present value of the projected future cash flows of the subordinated notes,
was approximately $9.5 million, using a 22.0% discount rate. The Company’s total investment
in the subordinate notes of Saratoga CLO is $57.8 which consists of additional investments of $30 million in January 2008, $13.8 million
in December 2018 and $14.0 million in February 2021. To date the Company has since received distributions of $84.6 million, management
fees of $35.1 million and incentive fees of $1.2 million.
 
As of February 28, 2023, the Company determined
that the fair value of its investment in the subordinated notes of Saratoga CLO was $21.2 million. As of February 28, 2023, the fair value
of its investment in the Class F-R-3 Notes of Saratoga CLO was $8.8 million. As of February 28, 2023, Saratoga CLO had investments with
a principal balance of $645.6 million and a weighted average spread over LIBOR of 3.8% and had debt with a principal balance of $611.0
million with a weighted average spread over LIBOR of 2.2%. As of February 28, 2023, the present value of the projected future cash flows
of the subordinated notes, was approximately $21.2 million, using a 22.0% discount rate. The Company’s total investment in the subordinate
notes of Saratoga CLO is $57.8 million, which consists of additional investments of $30 million in January 2008, $13.8 million in December
2018 and $14.0 million in February 2021. As of February 28, 2023, the Company has received distributions of $77.7 million, management
fees of $31.9 million and incentive fees of $1.2 million.
 
The separate audited financial statements of the
Saratoga CLO as of February 29, 2024 and February 28, 2023, pursuant to Rule 3-09 of SEC rules Regulation S-X, and for the years ended
February 29, 2024, February 28, 2023 and February 28, 2022, are presented on page S-1.
 


F-46
 

 
Note 5. Investment in SLF JV
 
On October 26, 2021, the Company and TJHA entered
into the LLC Agreement to co-manage SLF JV. SLF JV is invested in Saratoga Investment Corp Senior Loan Fund 2022-1, Ltd (“SLF 2021”),
which is a wholly owned subsidiary of SLF JV. SLF 2021 was formed for the purpose of making investments in a diversified portfolio of
broadly syndicated first lien and second lien term loans or bonds in the primary and secondary markets.
 
On September 30, 2022, SLF 2021 was renamed to
Saratoga Investment Corp Senior Loan Fund 2022-1, Ltd. (“SLF 2022”).
 
The Company and TJHA have equal voting interest
on all material decisions with respect to SLF JV, including those involving its investment portfolio, and equal control of corporate governance.
No management fee is charged to SLF JV as control and management of SLF JV is shared equally.
 
The Company and TJHA have committed to provide
up to a combined $50.0 million of financing to SLF JV through cash contributions, with the Company providing $43.75 million and TJHA providing
$6.25 million, resulting in an 87.5% and 12.5% ownership between the two parties. The financing is issued in the form of an unsecured
note and equity. The unsecured note pays a fixed rate of 10% per annum and is due and payable in full on October 20, 2033. As of February
29, 2024, the Company and TJHA’s investment in SLF JV consisted of an unsecured note of $17.6 million and $2.5 million, respectively;
and membership interest of $17.6 million and $2.5 million, respectively. As of February 28, 2023, the Company and TJHA’s investment
in SLF JV consisted of an unsecured note of $17.6 million and $2.5 million, respectively; and membership interest of $17.6 million and
$2.5 million, respectively. As of February 29, 2024, and February 28, 2023, the Company’s investment in the unsecured note of SLF
JV had a fair value of $15.8 million and $17.6 million, respectively, and the Company’s investment in the membership interests of
SLF JV had a fair value of $9.4 million and $13.1 million, respectively.
  
The Company has determined that SLF JV is an investment
company under ASC 946; however, in accordance with such guidance the Company will generally not consolidate its investment in a company
other than a wholly owned investment company subsidiary. SLF JV is not a wholly owned investment company subsidiary as the Company and
TJHA each have an equal 50% voting interest in SLF JV and thus neither party has a controlling financial interest. Furthermore, ASC 810
concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate
the joint venture since neither has control. Accordingly, the Company does not consolidate SLF JV.
 
For the year ended February 29, 2024, the Company
earned approximately $1.8 million of interest income related to SLF JV, which is included in interest income on the Statement of Operations.
As of February 29, 2024, approximately $0.2 million of interest income related to SLF JV was included in interest receivable on the Statements
of Assets and Liabilities.
 
For the year ended February 28, 2023 the
Company earned approximately $1.5 million of interest income related to SLF JV, which is included in interest income on the
Statements of Operations. As of February 28, 2023, approximately $0.4 million of interest income related to SLF JV was included in
interest receivable on the Statements of Assets and Liabilities.
 
For the period from October 26, 2021, through
February 28, 2022, the Company earned approximately $0.1 million of interest income related to SLF JV, which is included in interest
income on the Statement of Operations. As of February 28, 2022, approximately $0.1 million of interest income related to SLF JV was
included in interest receivable.
 
For the years ended February 29, 2024, and February
28, 2023 and 2022, the Company earned approximately $5.9 million, $0.0 million and $0.0 million of dividend related to SLF JV, which is
included in dividend income on control investments.
 
SLF JV’s initial investment in SLF 2022
was in the form of an unsecured loan. The unsecured loan paid a floating rate of LIBOR plus 7.00% per annum and was paid in full on June
9, 2023. The unsecured loan was repaid in full on October 28, 2022, as part of the CLO closing.
 
On October 28, 2022, SLF 2022 issued $402.1 million
of the 2022 JV CLO Notes through the JV CLO trust. The 2022 JV CLO Notes were issued pursuant to the JV Indenture, with the Trustee. As
part of the transaction, the Company purchased 87.50% of the Class E Notes from SLF 2022 with a par value of $12.25 million.
As of February 29, 2024 and February 28, 2023, the fair value of these Class E Notes were $12.3 million and $11.4 million, respectively.
 


F-47
 

 
Note 6. Income Taxes
 
The Company has elected and intends to operate
so as to qualify annually to be taxed as a RIC under Subchapter M of the Code and, as such, will not be subject to U.S. federal income
tax on the portion of taxable income and gains timely distributed to stockholders.
 
The Company owns 100% of Saratoga CLO, an exempted
company incorporated in the Cayman Islands. For financial reporting purposes, the Saratoga CLO is not included as part of the consolidated
financial statements. For U.S. federal income tax purposes, the Company has requested and received approval from the IRS to treat the
Saratoga CLO as a disregarded entity. As such, for U.S. federal income tax purposes and for purposes of meeting the RIC qualification
and diversification tests, the results of operations of the Saratoga CLO are included with those of the Company to qualify as a RIC. Generally,
the Company is required to meet certain income and asset diversification tests in addition to timely distributing at least 90% of its
investment company taxable income, as defined by the Code. Because U.S. federal income tax regulations differ from U.S. GAAP, distributions
as required in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting
purposes. Differences between these distributions and U.S. GAAP financial results may be permanent or temporary in nature. Permanent differences
are reclassified among capital accounts in the consolidated financial statements to reflect their tax character. Differences in classification
may also result from the treatment of short-term gains as ordinary income for U.S. federal income tax purposes. As of February 29, 2024
and February 28, 2023, the Company reclassified for book purposes amounts arising from permanent book/tax differences primarily related
to nondeductible U.S. federal excise and capital gains tax and worthless securities losses (dollars in thousands):
 


  
February 29,
 2024  
February 28,
 2023 

Capital in excess of par value 
$(779) 
$16 

Total distributable earnings (loss) 
 779  
 (16)

 
For U.S federal income tax purposes, distributions
paid to shareholders are reported as ordinary income, return of capital, long term capital gains or a combination thereof. The tax character
of distributions paid for the years ended February 29, 2024, February 28, 2023 and February 28, 2022 was as follows (dollars in thousands):
 


  
February 29,
 2024  
February 28,
 2023  
February 28,
 2022 

Ordinary income 
$35,636  
$27,313  
$22,033 

Capital gains 
 -  
 -  
 - 

Total 
$35,636  
$27,313  
$22,033 

 
For U.S. federal income tax purposes, as of February 29, 2024, the
aggregate net unrealized depreciation for all securities was $39.7 million. The aggregate cost of securities for U.S. federal income tax
purposes was $1.8 billion.
 
For U.S. federal income tax purposes, as of February
28, 2023, the aggregate net unrealized depreciation for all securities was $15.5 million. The aggregate cost of securities for U.S. federal
income tax purposes was $1.6 billion. 



F-48
 

 
As of February 29, 2024 and February 28, 2023,
the components of accumulated losses on a tax basis as detailed below differ from the amounts reflected per the Company’s consolidated
statements of assets and liabilities by temporary book/tax differences primarily arising from the consolidation of the Saratoga CLO for
U.S federal tax purposes, market discount and original issue discount income, interest income accrual on defaulted bonds, write-off of
investments, and amortization of organizational expenditures and partnership interests (dollars in thousands).
 


  
February 29, 2024  
February 28, 2023 

Post October loss deferred 
$        -  
$- 

Accumulated capital losses 
 (19,900) 
 (1,580)

Other temporary differences 
 6,855  
 1,971 

Undistributed Long Term Gain 
 -  
 - 

Undistributed ordinary income 
 46,215  
 19,771 

Unrealized appreciation (depreciation) 
 (39,685) 
 (15,500)

Total components of accumulated losses 
$(6,515) 
$4,662 

 
At February 29, 2024, the Company had a short-term
capital loss of $0.0 million and a long-term capital loss of $19.9 million, available to offset future capital gains. At February 29,
2024 the company did not utilize any short-term capital losses or long-term capital losses. Post RIC-modernization act losses are deemed
to arise on the first day of the fund’s following fiscal year and there is no expiration for these losses. As of February 28, 2023, the Company had net long-term capital losses of $1.6 million.
 
Depending on the level of taxable income earned
in a tax year, the Company may choose to carry forward taxable income in excess of current year dividend distributions into the next
tax year and pay a 4.0% U.S. federal excise tax on such income, as required. To the extent that the Company determines that its estimated
current year annual taxable income will be in excess of estimated current year dividend distributions for excise tax purposes, the Company
accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. For the calendar years ended December 31,
2023 and December 31, 2022, the Company did not distribute at least 98% of its ordinary income and 98.2% of its capital gains and accrued
$1.8 million and $1.1 million in U.S. federal excise taxes on undistributed taxable income for the years ended February 29, 2024 and
February 28, 2023, respectively.
 
Management has analyzed the Company’s tax
positions taken on U.S. federal income tax returns for all open years (fiscal years 2020- 2023) and has concluded that no provision for
uncertain income tax positions is required in the Company’s consolidated financial statements.
 
SIA-AAP, Inc., SIA-ARC, Inc., SIA-Avionte, Inc., SIA-AX, Inc., SIA-G4,
Inc., SIA-GH, Inc., SIA-MAC, Inc., SIA-MDP, Inc., SIA-PP Inc., SIA-SZ, Inc., SIA-TG, Inc., SIA-TT Inc., SIA-Vector, Inc., and SIA-VR,
Inc., each 100% owned by the Company, are each filing standalone C Corporation tax returns for U.S. federal and state tax purposes. As
separately regarded entities for tax purposes, these entities are subject to U.S. federal income tax at corporate rates. For tax purposes,
any distributions by the entities to the parent company would generally need to be distributed to the Company’s shareholders. Generally,
such distributions of the entities’ income to the Company’s shareholders will be considered as qualified dividends for tax
purposes. The entities’ taxable net income will differ from U.S. GAAP net income because of deferred tax temporary differences arising
from net operating losses and unrealized appreciation and deprecation of securities held. Deferred tax assets and liabilities are measured
using enacted corporate federal and state tax rates expected to apply to taxable income in the years in which those net operating losses
are utilized and the unrealized gains and losses are realized. Deferred tax assets and deferred tax liabilities are netted off by entity,
as allowed. The recoverability of deferred tax assets is assessed and a valuation allowance is recorded to the extent that it is more
likely than not that any portion of the deferred tax asset will not be realized on the basis of a history of operating losses combined
with insufficient projected taxable income or other taxable events in the Corporate Blockers. In February 2022, SIA-GH, Inc., SIA-TT Inc.
and SIA-VR, Inc. received an approved plan of liquidation following the sale of equity held by each of the portfolio companies.
  
The Company’s V Rental Holdings LLC
Class A-1 membership units were sold during the year ended February 28, 2022. The entity which held this investment, SIA-VR, Inc.
will remain in existence for a period of time until all ongoing indemnification obligations are settled, after which it will be
dissolved. For purposes of tax accounting, the Company had an $0.0 million current tax receivable as of February 29, 2024.
 
The Company’s Texas Teachers of Tomorrow,
LLC common stock was sold during the year ended February 28, 2022. The entity which held this investment, SIA-TT, Inc. will remain in
existence for a period of time until all ongoing indemnification obligations are settled, after which it will be dissolved. For purposes
of tax accounting, the Company had an $0.01 million current tax receivable as of February 29, 2024. 



F-49
 

 
The Company’s GreyHeller LLC Series A preferred
units was sold during the year ended February 28, 2022. The entity which held this investment, SIA-TT, Inc. will remain in existence
for a period of time until all ongoing indemnification obligations are settled, after which it will be dissolved. For purposes of tax
accounting, the Company had an $0.09 million current tax receivable as of February 29, 2024.
 
The Company may distribute a portion of its realized
net long term capital gains in excess of realized net short term capital losses to its stockholders, but may also decide to retain a portion,
or all, of its net capital gains and elect to pay the 21% U.S. federal tax on the net capital gain, potentially in the form of a “deemed
distribution” to its stockholders.  Income tax (provision) relating to an election to retain its net capital gains, including
in the form of a deemed distribution, is included as a component of income tax (provision) benefit from realized gains on investments,
depending on the character of the underlying taxable income (ordinary or capital gains), on the consolidated statements of operations. 
  
Deferred tax assets and liabilities, and related
valuation allowances, as of February 29, 2024 and February 28, 2023, were as follows:
 


  
February 29,
 2024  
February 28,
 2023 

Total deferred tax assets 
$2,650,580  
$2,542,373 

Total deferred tax liabilities 
 (3,901,995) 
 (3,008,829)

Valuation allowance on net deferred tax assets 
 (2,539,735) 
 (2,350,116)

Net deferred tax liability 
$(3,791,150) 
$(2,816,572)

 
As of February 29, 2024, the valuation allowance
on deferred tax assets was $2.5 million, which represents the federal and state tax effect of net operating losses and unrealized losses
that we do not believe we will realize through future taxable income. Any adjustments to the Company’s valuation allowance will
depend on estimates of future taxable income and will be made in the period such determination is made.
 
Net deferred tax expense (benefit) for the year ended February 29, 2024 includes $0.9 million net change in unrealized appreciation (depreciation) on investments and
$0.04 million net change in total operating expense (benefit), in the consolidated statement of operations, respectively.
 
Net deferred tax expense (benefit) for the
year ended February 28, 2023 includes $1.7 million net change in unrealized appreciation (depreciation) on investments and $(0.2)
million net change in total operating expense, in the consolidated statement of operations, respectively.
 
Net deferred tax expense (benefit) for the
year ended February 28, 2022 includes $(0.7) million net change in unrealized appreciation (depreciation) on investments and $0.0
million net change in total operating expense, in the consolidated statement of operations, respectively.
 
Deferred tax temporary differences may include
differences for state taxes and joint venture interests.
 

Federal and state income tax provisions (benefits) on investments
are as follows:
 


  
February 29,
 2024  
February 28,
 2023  
February 28,
 2022 

Current 
   
   
  

Federal 
$-  
$(473,475) 
$2,498,515 

State 
 -  
 (80,273) 
 327,021 

Net current expense 
 -  
 (553,748) 
 2,825,536 

Deferred 
    
    
   

Federal 
 990,920  
 1,467,975  
 (444,628)

State 
 (16,343) 
 99,582  
 (227,737)

Net deferred expense 
 974,577  
 1,567,557  
 (672,365)

Net tax provision 
$974,577  
$1,013,809  
$2,153,171 

 
The Company has remaining federal net operating
loss carryforwards of $0.03 million which will expire starting in 2037, with the remaining net operating loss carryforwards of $6.2 million
having an indefinite life. In addition, the Company has state net operating loss carryforwards of $2.5 million, which begin to expire
in fiscal year 2029.
 
Income tax expense was computed by applying the
U.S. federal statutory rate of 21% combined with the weighted average state tax rate applicable to each Corporate Blocker based on the
states they operate in.
 


F-50
 

 
Note 7. Agreements and Related Party Transactions
 
Investment Advisory and Management Agreement
 
On July 30, 2010, the Company entered into the
Management Agreement with the Manager. The initial term of the Management Agreement was two years from its effective date, with one-year
renewals thereafter subject to certain approvals by the Company’s board of directors and/or the Company’s stockholders. Most
recently, on July 6, 2023, the Company’s board of directors approved the renewal of the Management Agreement for an additional one-year
term. Pursuant to the Management Agreement, the Manager implements the Company’s business strategy on a day-to-day basis and performs
certain services for the Company, subject to oversight by the board of directors. The Manager is responsible for, among other duties,
determining investment criteria, sourcing, analyzing and executing investments transactions, asset sales, financings and performing asset
management duties. Under the Management Agreement, the Company pays the Manager a management fee for investment advisory and management
services consisting of a base management fee and an incentive management fee.
 
Base Management Fee and Incentive Management Fee
 
The base management fee of 1.75% per year is calculated
based on the average value of our gross assets (other than cash or cash equivalents, but including assets purchased with borrowed funds)
at the end of the two most recently completed fiscal quarters. The base management fee is paid quarterly following the filing of the most
recent quarterly report on Form 10-Q.
 
The incentive management fee consists of the following
two parts:
 
The first, payable quarterly in arrears, equals
20% of the Company’s pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets at the
end of the immediately preceding quarter, that exceeds a 1.875% quarterly hurdle rate measured as of the end of each fiscal quarter, subject
to a “catch-up” provision. Under this provision, in any fiscal quarter, the Manager receives no incentive fee unless our pre-incentive
fee net investment income exceeds the hurdle rate of 1.875%. The Manager will receive 100% of pre-incentive fee net investment income,
if any, that exceeds the hurdle rate but is less than or equal to 2.344% in any fiscal quarter; and 20% of the amount of our pre-incentive
fee net investment income, if any, that exceeds 2.344% in any fiscal quarter. There is no accumulation of amounts on the hurdle rate from
quarter to quarter, and accordingly there is no claw back of amounts previously paid if subsequent quarters are below the quarterly hurdle
rate, and there is no delay of payment if prior quarters are below the quarterly hurdle rate.
 
The second part of the incentive fee is determined
and payable in arrears as of the end of each fiscal year (or upon termination of the Management Agreement) and equals 20% of the Company’s
“incentive fee capital gains,” which equals the Company’s realized capital gains on a cumulative basis from May 31,
2010 through the end of the fiscal year, if any, computed net of all realized capital losses and unrealized capital depreciation on a
cumulative basis on each investment in the Company’s portfolio, less the aggregate amount of any previously paid capital gain incentive
fee. Importantly, the capital gains portion of the incentive fee is based on realized gains and realized and unrealized losses from May
31, 2010. Therefore, realized and unrealized losses incurred prior to such time will not be taken into account when calculating the capital
gains portion of the incentive fee, and the Manager will be entitled to 20.0% of incentive fee capital gains that arise after May 31,
2010. In addition, for the purpose of the “incentive fee capital gains” calculations, the cost basis for computing realized
gains and losses on investments held by us as of May 31, 2010 will equal the fair value of such investments as of such date.
 
For the years ended February 29, 2024, February 28, 2023 and February
28, 2022, the Company incurred $19.2 million, $16.4 million and $11.9 million in base management fees, respectively. For the years ended
February 29, 2024, February 28, 2023 and February 28, 2022, the Company incurred $13.0 million, $6.8 million and $6.4 million in incentive
fees related to pre-incentive fee net investment income. For the years ended February 29, 2024, February 28, 2023 and February 28, 2022,
the Company accrued $(8.3) million, $(1.8) million and $5.5 million, respectively, in incentive fees related to capital gains.
 
The accrual is calculated using both realized and
unrealized capital gains for the period. The actual incentive fee related to capital gains will be determined and payable in arrears at
the end of the fiscal year and will include only realized capital gains for the period. As of February 29, 2024, the base management fees
accrual was $5.0 million and the incentive fees accrual was $3.2 million and are included in base management and incentive fees payable
in the accompanying consolidated statements of assets and liabilities. As of February 28, 2023, the base management fees accrual was $4.3
million and the incentive fees accrual was $7.9 million and are included in base management and incentive fees payable in the accompanying
consolidated statements of assets and liabilities. 



F-51
 

 
Administration Agreement
 
On July 30, 2010, the Company entered into a separate
administration agreement (the “Administration Agreement”) with the Manager, pursuant to which the Manager, as the Company’s
administrator, has agreed to furnish the Company with the facilities and administrative services necessary to conduct day-to-day operations
and provide managerial assistance on the Company’s behalf to those portfolio companies to which the Company is required to provide
such assistance. The initial term of the Administration Agreement was two years from its effective date, with one-year renewals thereafter
subject to certain approvals by the Company’s board of directors and/or the Company’s stockholders. The amount of expenses
payable or reimbursable thereunder by the Company was capped at $1.0 million for the initial two-year term of the Administration Agreement
and subsequent renewals. Most recently, on July 6, 2023, the Company’s board of directors approved the renewal of the Administration
Agreement for an additional one-year term and subsequently increased the cap on the payment or reimbursement of expenses by the Company
from $3.275 million to $4.3 million, effective August 1, 2023.
 
For the years ended February 29, 2024, February
28, 2023 and February 28, 2022, we recognized $3.9 million, $3.2 million and $2.9 million in administrator expenses, respectively, pertaining
to bookkeeping, recordkeeping and other administrative services provided to us in addition to our allocable portion of rent and other
overhead related expenses. As of February 29, 2024, $0.5 million of administrator expenses were accrued and included in due to Manager
in the accompanying consolidated statements of assets and liabilities. As of February 28, 2023, $0.001 million of administrator expenses
were accrued and included in due to Manager in the accompanying consolidated statements of assets and liabilities.
 
Saratoga CLO
 
On December 14, 2018, the Company completed the
third refinancing and issuance of the 2013-1 Reset CLO Notes. This refinancing, among other things, extended the Saratoga CLO reinvestment
period to January 2021, and extended its legal maturity to January 2030. In addition, and as part of the refinancing, the Saratoga CLO
has also been upsized from $300 million in assets to approximately $500 million.
 
In conjunction with the third refinancing and
issuance of the 2013-1 Reset CLO Notes on December 14, 2018, the Company is no longer entitled to receive an incentive management fee
from Saratoga CLO. See Note 4 for additional information.
 
On February 26, 2021, the Company completed the
fourth refinancing of the Saratoga CLO. This refinancing, among other things, extended the Saratoga CLO reinvestment period to April 2024,
extended its legal maturity to April 2033, and extended the non-call period to February 2022. In addition, and as part of the refinancing,
the Saratoga CLO was upsized from $500 million in assets to approximately $650 million. As part of this refinancing and upsizing, the
Company invested an additional $14.0 million in all of the newly issued subordinated notes of the Saratoga CLO, and purchased $17.9 million
in aggregate principal amount of the Class F-R-3 Notes tranche at par. Concurrently, the existing $2.5 million of Class F-R-2 Notes, $7.5
million of Class G-R-2 Notes and $25.0 million CLO 2013-1 Warehouse 2 Loan were repaid. The Company also paid $2.6 million of transaction
costs related to the refinancing and upsizing on behalf of the Saratoga CLO, to be reimbursed from future equity distributions. At November
30, 2021, the outstanding receivable of 2.6 million was repaid in full.
 
On August 9, 2021, the Company exchanged its existing
$17.9 million Class F-R-3 Notes for $8.5 million Class F-1-R-3 Notes and $9.4 million Class F-2-R-3 Notes at par. On August 11, 2021,
the Company sold its Class F-1-R-3 Notes to third parties, resulting in a realized loss of $0.1 million.
  
As of February 29, 2024, and February 28, 2023,
the Company’s investment in the Class F-2-R-3 Note of the Saratoga CLO had a fair value of $8.9 million and $8.8 million, respectively.
In addition, the Company has no outstanding receivable balance from the Class F-2-R-3 Note of the Saratoga CLO, as of February 29, 2024.
 
For the years ended February 29, 2024, February
28, 2023, and February 28, 2022, we recognized $1.5 million, $1.2 million and $0.5 million in interest income, respectively, related to
the Class F-2-R-3 Note of the Saratoga CLO.
 
As of February 29, 2024, and February 28, 2023,
the Company’s investment in the Subordinated Note of the Saratoga CLO had a fair value of $9.5 million and $21.2 million, respectively.
In addition, the Company has no outstanding receivable balance from the Subordinated Note of the Saratoga CLO, as of February 29, 2024.
 
For the years ended February 29, 2024, February
28, 2023, and February 28, 2022, we recognized $3.3 million, $3.3 million and $3.3 million in management fee income, respectively, related
to the Subordinated Note of the Saratoga CLO.
 
For the years ended February 29, 2024, February
28, 2023, and February 28, 2022, we recognized $0.0 million, $1.2 million and $4.4 million in interest income, respectively, related to
the Subordinated Note of the Saratoga CLO.
 
For the years ended February 29, 2024, February
28, 2023, and February 28, 2022, the Company neither bought nor sold any investments from the Saratoga CLO. 



F-52
 

 
SLF JV 
 
On October 26, 2021, the Company and TJHA entered
into an LLC Agreement to co-manage the SLF JV. SLF JV is a joint venture that invests in the debt or equity interests of collateralized
loan obligations, loan, notes and other debt instruments. The Company records interest income from its investment in an unsecured loan
with SLF JV on an accrual basis and records dividend income from its membership interest when earned.  All operating decisions are
shared with a 50% voting interest in SLF JV.
 
On October 28, 2022, SLF 2022 issued $402.1 million
of the 2022 JV CLO Notes through the JV CLO trust. The 2022 JV CLO Notes were issued pursuant to the JV Indenture, with the Trustee.
 
As of February 29, 2024 and February 28, 2023
respectively, the Company’s investment in the SLF JV had a fair value of $25.2 million and $30.7 million, consisting of an unsecured
loan of $15.8 million and $17.6 million, and membership interest of $9.4 million and $13.1 million. In addition, approximately $0.3 million and $0.4 million of interest income related to SLF JV was included in
interest receivable on the Statement of Assets and Liabilities.
 
For the years ended February 29, 2024, February
28, 2023, and February 28, 2022, we recognized $1.8 million, $1.5 million and $0.1 million in interest income on the consolidated statement
of operations, respectively, related to the SLF JV.
 
For the years ended February 29, 2024, and February
28, 2023 and 2022, the we recognized $5.9 million, $0.0 million and $0.0 million of dividend income on the consolidated statement of operations,
respectively, related to the SLF JV.
 
As part of the JV CLO trust transaction, the Company
purchased 87.50% of the Class E Notes from SLF 2022 with a par value of $12.25 million.
 
Note 8. Borrowings
 
Credit Facility
 
As a BDC, we are only allowed to employ leverage
to the extent that our asset coverage, as defined in the 1940 Act, equals at least 200% after giving effect to such leverage, or, 150%
if certain requirements under the 1940 Act are met. On April 16, 2018, as permitted by the Small Business Credit Availability Act, which
was signed into law on March 23, 2018, our board of directors, including a majority of our directors who are not “interested persons”
(as defined in Section 2(a)(19) of the 1940 Act”) of the Company (“independent directors”), approved a minimum asset
coverage ratio of 150%. The 150% asset coverage ratio became effective on April 16, 2019. The amount of leverage that we employ at any
time depends on our assessment of the market and other factors at the time of any proposed borrowing. Our asset coverage ratio, as defined
in the 1940 Act, was 161.1% as of February 29, 2024 and 165.9% as of February 28, 2023.
 
On April 11, 2007, we entered into a $100.0 million
revolving securitized credit facility (the “Revolving Facility”). On May 1, 2007, we entered into a $25.7 million term securitized
credit facility (the “Term Facility” and, together with the Revolving Facility, the “Facilities”), which was fully
drawn at closing. In December 2007, we consolidated the Facilities by using a draw under the Revolving Facility to repay the Term Facility.
In response to the market wide decline in financial asset prices, which negatively affected the value of our portfolio, we terminated
the revolving period of the Revolving Facility effective January 14, 2009 and commenced a two-year amortization period during which all
principal proceeds from the collateral were used to repay outstanding borrowings. A significant percentage of our total assets had been
pledged under the Revolving Facility to secure our obligations thereunder. Under the Revolving Facility, funds were borrowed from or through
certain lenders and interest was payable monthly at the greater of the commercial paper rate and our lender’s prime rate plus 4.00%
plus a default rate of 2.00% or, if the commercial paper market was unavailable, the greater of the prevailing LIBOR rates and our lender’s
prime rate plus 6.00% plus a default rate of 3.00%.
 
On July 30, 2010, we used the net proceeds from
(i) the stock purchase transaction and (ii) a portion of the funds available to us under the $45.0 million senior secured revolving credit
facility with Madison Capital Funding LLC (the “Madison Credit Facility”), in each case, to pay the full amount of principal
and accrued interest, including default interest, outstanding under the Revolving Facility. As a result, the Revolving Facility was terminated
in connection therewith. Substantially all of our total assets, other than those held by SBIC LP, SBIC II LP and SBIC III LP, were pledged
under the Madison Credit Facility to secure our obligations thereunder.
 
On October 4, 2021, all outstanding amounts on
the Madison Credit Facility were repaid and the Madison Credit Facility was terminated. The repayment and termination of the Madison Credit
Facility resulted in a realized loss on the extinguishment of debt of $0.8 million.  



F-53
 

 
Encina Credit Facility
 
On October 4, 2021, the Company entered into the
Credit and Security Agreement (the “Encina Credit Agreement”) relating to a $50.0 million senior secured revolving credit
facility with the Lender, supported by loans held by SIF II and pledged to the Encina Credit Facility. The terms of the Encina Credit
Facility required a minimum drawn amount of $12.5 million at all times during the first six months following the closing date, which increased
to the greater of $25.0 million or 50% of the commitment amount in effect at any time thereafter. Advances under the Encina Credit Facility
originally bore interest at a floating rate per annum equal to LIBOR plus 4.0%, with LIBOR having a floor of 0.75%, with customary provisions
related to the selection by the Lender and the Company of a replacement benchmark rate. 
 
On January 27, 2023,
we entered into the first amendment to the Encina Credit Agreement to, among other things:
 
    ● increase the borrowings available under the Encina Credit Facility from up to $50.0 million to up to $65.0 million; 
 


 
●
change the underlying benchmark used to compute interest under the Encina Credit Agreement from LIBOR to Term SOFR for a one-month tenor plus a 0.10% credit spread adjustment;

 


 
●
increase the applicable effective margin rate on borrowings from 4.00% to 4.25%;

 


 
●
extend the revolving period from October 4, 2024 to January 27, 2026;

 


 
●
extend the period during which the borrower may request one or more increases in the borrowings available under the Encina Credit Facility (each such increase, a “Facility Increase”) from October 4, 2023 to January 27, 2025, and increased the maximum borrowings available pursuant to the Encina Facility Increase from $75.0 million to $150.0 million;

 


 
●
revise the eligibility criteria for eligible collateral loans to exclude certain industries in which an obligor or related guarantor may be involved; and

 


 
●
amend the provisions permitting the borrower to request an extension
in the Commitment Termination Date (as defined in the Encina Credit Agreement) to allow requests to extend any applicable Commitment Termination
Date, rather than a one-time request to extend the original Commitment Termination Date, subject to a notice requirement.

 
In addition to any fees or other amounts payable
under the terms of the Encina Credit Facility, an administrative agent fee per annum equal to $0.1 million is payable in equal
monthly installments in arrears.
 
As of February 29, 2024 and February 28, 2023,
there were $35.0 million and $32.5 million outstanding borrowings under the Encina Credit Facility. During the applicable periods, the
Company was in compliance with all of the limitations and requirements under the Encina Credit Agreement. Financing costs of $2.0 million
related to the Encina Credit Facility have been capitalized and are being amortized over the term of the facility, with all existing financing
costs amortized through January 27, 2026 from the date of the amendment and extension. For
the years ended February 29, 2024, February 28, 2023 and February 28, 2022, we recorded $3.9 million, $2.0 million and $0.8 million of
interest expense related to the Encina Credit Facility and the Madison Credit Facility, respectively, which includes commitment and administrative
agent fees.
 
For the years ended February 29, 2024, February
28, 2023 and February 28, 2022, we recorded $0.5 million, $0.5 million and $0.3 million of amortization of deferred financing costs related
to the Encina Credit Facility and Madison Credit Facility, respectively. Interest expense and amortization of deferred financing costs
are reported as interest and debt financing expenses on the consolidated statements of operations. For the fiscal year ended February
29, 2024, the average borrowings outstanding and the weighted average interest rate on outstanding borrowings under the Encina Credit
Facility was approximately $37.9 million and 9.66%, respectively. For the fiscal year ended February 28, 2023, the average borrowings
outstanding and the weighted average interest rate on outstanding borrowings under the Encina Credit Facility and the Madison Credit Facility
were approximately $26.3 million and 6.72%, respectively. For the fiscal year ended February 28, 2022, the average borrowings outstanding
and the weighted average interest rate on outstanding borrowings under the Encina Credit Facility and the Madison Credit Facility were
approximately $8.7 million and 5.22%, respectively. 



F-54
 

 
The Encina Credit Facility contains limitations
as to how borrowed funds may be used, such as restrictions on industry concentrations, asset size, weighted average life, currency denomination
and collateral interests. The Encina Credit Facility also includes certain requirements relating to portfolio performance, the violation
of which could result in the limit of further advances and, in some cases, result in an event of default, allowing the lenders to accelerate
repayment of amounts owed thereunder. Availability on the Encina Credit Facility will be subject to a borrowing base calculation, based
on, among other things, applicable advance rates (which vary from 50.0% to 75.0% of par or fair value depending on the type of loan asset)
and the value of certain “eligible” loan assets included as part of the borrowing base. Funds may be borrowed at the greater
of the prevailing one-month SOFR rate, plus an applicable effective margin of 4.25%. In addition, the Company will pay the lender a commitment
fee of 0.75% per year (or 0.50% if the ratio of advances outstanding to aggregate commitments is greater than or equal to 50%) on the
unused amount of the Encina Credit Facility.
 
Our borrowing base under the Encina Credit Facility
was $35.0 million subject to the Encina Credit Facility cap of $65.0 million at February 29, 2024. For purposes of determining the borrowing
base, most assets are assigned the values set forth in our most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q filed
with the U.S. Securities and Exchange Commission (“SEC”). Accordingly, the February 29, 2024 borrowing base relies upon the
valuations set forth in the Quarterly Report on Form 10-Q for the period ended November 30, 2023. The valuations presented in this Quarterly
Report on Form 10-Q will not be incorporated into the borrowing base until after this Annual Report on Form 10-K is filed with the SEC.
 
SBA Debentures
 
The Company’s wholly owned subsidiaries,
SBIC LP, SBIC II LP, and SBIC III LP, received SBIC licenses from the SBA on March 28, 2012, August 14, 2019, and September 29, 2022,
respectively. SBIC LP’s license provides up to $150.0 million in additional long-term capital in the form of SBA debentures, while
SBIC II LP’s and SBIC III LP’s SBIC licenses each provide up to $175.0 million. Under current SBIC regulations, for two or
more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million. Following the debentures
being fully repaid to the SBA, SBIC LP surrendered its license on January 3, 2024, providing the Company access to all undistributed capital
of SBIC LP.
 
SBICs are designed to stimulate the flow of private
equity capital to eligible small businesses. Under SBA regulations, SBICs may make loans to eligible small businesses and invest in the
equity securities of small businesses. Under present SBA regulations, eligible small businesses include businesses that have a tangible
net worth not exceeding $24.0 million and have average annual fully taxed net income not exceeding $8.0 million for the two most recent
fiscal years. In addition, an SBIC must devote 25.0% of its investment activity to “smaller enterprises” as defined by the
SBA. A smaller enterprise is one that has a tangible net worth not exceeding $6.0 million and has average annual fully taxed net income
not exceeding $2.0 million for the two most recent fiscal years. SBA regulations also provide alternative size standard criteria to determine
eligibility, which depend on the industry in which the business is engaged and are based on such factors as the number of employees and
gross sales. According to SBA regulations, SBICs may make long-term loans to small businesses, invest in the equity securities of such
businesses and provide them with consulting and advisory services.
 
The Company’s wholly owned SBIC Subsidiaries
are able to borrow funds from the SBA against each SBIC’s regulatory capital (which generally approximates equity capital in the
respective SBIC). The SBIC Subsidiaries are subject to customary regulatory requirements including but not limited to, a periodic examination
by the SBA and requirements to maintain certain minimum financial ratios and other covenants. Receipt of an SBIC license does not assure
that the SBIC Subsidiaries will receive SBA-guaranteed debenture funding, which is dependent upon the SBIC Subsidiaries complying with
SBA regulations and policies. The SBA, as a creditor, will have a superior claim to each SBIC Subsidiaries’ assets over the Company’s
stockholders and debtholders in the event that the Company liquidates such SBIC Subsidiary or the SBA exercises its remedies under the
SBA-guaranteed debentures issued by the SBIC Subsidiary upon an event of default.
 
The Company received exemptive relief from the
SEC to permit it to exclude the debt of the SBIC subsidiaries guaranteed by the SBA from the definition of senior securities in the asset
coverage test under the 1940 Act. This allows the Company increased flexibility under the asset coverage requirement by permitting it
to borrow up to $350.0 million more than it would otherwise be able to absent the receipt of this exemptive relief. 



F-55
 

 
As of February 29, 2024, we have funded SBIC
II LP and SBIC III LP with an aggregate total of equity capital of $87.5 million and $66.7 million, respectively, and have $214.0
million in SBA-guaranteed debentures outstanding, of which $175.0 million was held by SBIC II LP and $39.0 million held in SBIC III
LP.
 
At February 29, 2024 and February 28, 2023, there
was $214.0 million and $202.0 million outstanding of SBA debentures, respectively. The carrying amount of the amount outstanding of SBA
debentures approximates its fair value, which is based on a waterfall analysis showing adequate collateral coverage and would be classified
as a Level 3 liability within the fair value hierarchy. Financing costs of $5.0 million, $6.0, and $0.4 million related to the SBA debentures
issued by SBIC LP, SBIC II LP and SBIC III LP, respectively, have been capitalized and are being amortized over the term of the commitment
and drawdown. During the year ended February 29, 2024, the Company repaid $27.0 million of SBA debentures, resulting in a realized loss
on extinguishment of $0.1 million related to the acceleration of deferred debt financing costs.
 
For the years ended February 29, 2024, February
28, 2023 and February 28, 2022, we recorded $6.2 million, $6.4 million and $4.7 million of interest expense related to the SBA debentures,
respectively. For the years ended February 29, 2024, February 28, 2023 and February 28, 2022, we recorded $1.0 million, $1.0 million and
$0.7 million of amortization of deferred financing costs related to the SBA debentures, respectively. Interest expense and amortization
of deferred financing costs are reported as interest and debt financing expense on the consolidated statements of operations. The weighted
average interest rate during the years ended February 29, 2024, February 28, 2023 and February 28, 2022 on the outstanding borrowings
of the SBA debentures was 3.08%, 2.78% and 2.60%, respectively. During the years ended February 29, 2024 and February 28, 2023, the average
dollar amount of SBA debentures outstanding was $202.5 million and $229.9 million, respectively.
 

Notes
 
6.25% 2025 Notes
 
On August 28, 2018, the Company issued $40.0 million
in aggregate principal amount of 6.25% fixed-rate notes due 2025 (the “6.25% 2025 Notes”) for net proceeds of $38.7 million
after deducting underwriting commissions of approximately $1.3 million. Offering costs incurred were approximately $0.3 million.
The issuance included the full exercise of the underwriters’ option to purchase an additional $5.0 million in aggregate principal
amount of 6.25% 2025 Notes within 30 days. The net proceeds from the offering were used for general corporate purposes in accordance with
the Company’s investment objective and strategies. Financing costs of $1.6 million related to the 6.25% 2025 Notes have been capitalized
and were amortized over the term of the 6.25% 2025 Notes.
 
On February 5, 2019, the Company issued an additional
$20.0 million in aggregate principal amount of the 6.25% 2025 Notes for net proceeds of $19.2 million after deducting underwriting commissions
of approximately $0.6 million and discount of $0.2 million. Offering costs incurred were approximately $0.2 million. The issuance included
the full exercise of the underwriters’ option to purchase an additional $2.5 million in aggregate principal amount of 6.25% 2025
Notes within 30 days. The additional 6.25% 2025 Notes were treated as a single series with the existing 6.25% 2025 Notes under the indenture
and have the same terms as the existing 6.25% 2025 Notes. The net proceeds from this offering were used for general corporate purposes
in accordance with the Company’s investment objective and strategies. The financing costs and discount of $1.0 million related to
the 6.25% 2025 Notes have been capitalized and were amortized over the term of the 6.25% 2025 Notes.
 
On August 31, 2021, the Company redeemed $60.0
million in aggregate principal amount of issued and outstanding 6.25% 2025 Notes. The 6.25% 2025 Notes were listed on the NYSE under the
trading symbol of “SAF” and have been delisted following the full redemption on August 31, 2021. As such, it was not fair
valued with market quotes and is not fair value leveled. The repayment of the 6.25% 2025 Notes resulted in a realized loss on the extinguishment
of debt of $1.5 million.  



F-56
 

 
7.25% 2025 Notes
 
On June 24, 2020, the Company issued $37.5 million
in aggregate principal amount of 7.25% fixed-rate notes due 2025 (the “7.25% 2025 Notes”) for net proceeds of $36.3 million
after deducting underwriting commissions of approximately $1.2 million. Offering costs incurred were approximately $0.3 million. On July
6, 2020, the underwriters exercised their option in full to purchase an additional $5.625 million in aggregate principal amount of its
7.25% 2025 Notes. Net proceeds to the Company were $5.4 million after deducting underwriting commissions of approximately $0.2 million.
The net proceeds from the offering were used for general corporate purposes in accordance with the Company’s investment objective
and strategies. Financing costs of $1.6 million related to the 7.25% 2025 Notes have been capitalized and were amortized over the term
of the 7.25% 2025 Notes.
 
On July 14, 2022, the Company redeemed $43.1 million
in aggregate principal amount of the issued and outstanding 7.25% 2025 Notes. The 7.25% 2025 Notes were listed on the NYSE under the trading
symbol of “SAK” and have been delisted following the full redemption on July 14, 2022. As such, it was not fair valued with
market quotes and is not fair value leveled. The repayment of the 7.25% 2025 Notes resulted in a realized loss on the extinguishment of
debt of $1.0 million.
  
For the years ended February 29, 2024 and February
28, 2023, we recorded $0.0 million and $1.2 million, respectively, of interest expense and $0.0 million and $0.1 million, respectively,
of amortization of deferred financing costs related to the 7.25% 2025 Notes. Interest expense and amortization of deferred financing costs
are reported as interest and debt financing expense on the consolidated statements of operations. For the year ended February 29, 2024
and February 28, 2023, the average dollar amount of 7.25% 2025 Notes outstanding was $0.0 million and $13.5 million, respectively.
 

7.75% 2025 Notes
 
On July 9, 2020, the Company issued $5.0 million
in aggregate principal amount of 7.75% fixed-rate notes due in 2025 (the “7.75% 2025 Notes”) for net proceeds of $4.8 million
after deducting underwriting commissions of approximately $0.2 million. Offering costs incurred were approximately $0.1 million. Interest
on the 7.75% 2025 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 7.75% per year. The
7.75% 2025 Notes mature on July 9, 2025 and may be redeemed in whole or in part at any time or from time to time at the Company’s
option subject to a fee depending on the date of repayment. The net proceeds from the offering were used for general corporate purposes
in accordance with the Company’s investment objective and strategies. Financing costs of $0.3 million related to the 7.75% 2025
Notes have been capitalized and are being amortized over the term of the 7.75% 2025 Notes.
 
As of February 29, 2024, the total 7.75% 2025
Notes outstanding was $5.0 million. The 7.75% 2025 Notes are not listed and have a par value of $25.00 per note. The carrying amount of
the outstanding 7.75% 2025 Notes had a fair value of $5.0 million, which is based on a market yield analysis and would be classified as
a Level 3 liability within the fair value hierarchy. As of February 28, 2023, the total 7.75% 2025 Notes outstanding was $5.0 million, and they had a fair value of
$5.0 million, which is based on a market yield analysis and would be classified as a Level 3 liability within the fair value hierarchy.
 
For the years ended February 29, 2024 and February
28, 2023, we recorded $0.4 million and $0.4 million, respectively, of interest expense and $0.05 million and $0.05 million, respectively,
of amortization of deferred financing costs related to the 7.75% 2025 Notes. Interest expense and amortization of deferred financing costs
are reported as interest and debt financing expense on the consolidated statements of operations. For the year ended February 29, 2024
and February 28, 2023, the average dollar amount of 7.75% 2025 Notes outstanding was $5.0 million and $5.0 million, respectively. 



F-57
 

 
6.25% 2027 Notes
 
On December 29, 2020, the Company issued $5.0
million in aggregate principal amount of 6.25% fixed-rate notes due in 2027 (the “6.25% 2027 Notes”). Offering costs
incurred were approximately $0.1 million. Interest on the 6.25% 2027 Notes is paid quarterly in arrears on February 28, May
31, August 31 and November 30, at a rate of 6.25% per year. The 6.25% 2027 Notes mature on December 29, 2027 and may be redeemed
in whole or in part at any time or from time to time at the Company’s option, on or after December 29, 2024. The net proceeds from
the offering were used for general corporate purposes in accordance with the Company’s investment objective and strategies. Financing
costs of $0.1 million related to the 6.25% 2027 Notes have been capitalized and are being amortized over the term of the Notes.
 
On January 28, 2021, the Company issued an additional
$10.0 million in aggregate principal amount of the 6.25% 2027 Notes for net proceeds of $9.7 million after deducting underwriting commissions
of approximately $0.3 million (the “Additional 6.25% 2027 Notes”). Offering costs incurred were approximately $0.1 million.
The Additional 6.25% 2027 Notes are treated as a single series with the existing 6.25% 2027 Notes under the indenture and have the same
terms as the existing 6.25% 2027 Notes. Interest on the 6.25% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31
and November 30, at a rate of 6.25% per year. The 6.25% 2027 Notes mature on January 28, 2027 and commencing January 28, 2023, may be
redeemed in whole or in part at any time or from time to time at the Company’s option. The net proceeds from the offering were used
for general corporate purposes in accordance with the Company’s investment objective and strategies. Financing costs of $0.4 million
related to the 6.25% 2027 Notes have been capitalized and are being amortized over the term of the 6.25% 2027 Notes. The 6.25% 2027 Notes
are not listed and have a par value of $25.00 per note.
 
As of February 29, 2024, the total 6.25% 2027
Notes outstanding was $15.0 million. The 6.25% 2027 Notes are not listed and have a par value of $25.00 per note. The carrying amount
of the outstanding 6.25% 2027 Notes had a fair value of $14.2 million, which is based on a market yield analysis and would be classified
as a Level 3 liability within the fair value hierarchy. As of February 28, 2023, the total 6.25% 2027 Notes outstanding was $15.0 million, and they had a fair value
of $13.7 million, which is based on a market yield analysis and would be classified as a Level 3 liability within the fair value hierarchy.
 
For the years ended February 29, 2024 and February
28, 2023, we recorded $0.9 million and $0.9 million, respectively, of interest expense and $0.07 million and $0.07 million, respectively,
of amortization of deferred financing costs related to the 6.25% 2027 Notes. Interest expense and amortization of deferred financing cost
are reported as interest and debt financing expense on the consolidated statements of operations. For the year ended February 29, 2024
and February 28, 2023, the average dollar amount of 6.25% 2027 Notes outstanding was $15.0 million and $15.0 million, respectively.
 
4.375% 2026 Notes
 
On March 10, 2021, the Company issued $50.0 million
in aggregate principal amount of 4.375% fixed-rate notes due in 2026 (the “4.375% 2026 Notes”) for net proceeds of $49.0 million
after deducting underwriting commissions of approximately $1.0 million. Offering costs incurred were approximately $0.3 million. 
Interest on the 4.375% 2026 Notes is paid semi-annually in arrears on February 28 and August 28, at a rate of 4.375% per year. The
4.375% 2026 Notes mature on February 28, 2026 and may be redeemed in whole or in part at any time on or after November 28, 2025 at par
plus a “make-whole” premium, and thereafter at par. The net proceeds from the offering were used for general corporate purposes
in accordance with the Company’s investment objective and strategies. Financing costs of $1.3 million related to the 4.375%
2026 Notes have been capitalized and are being amortized over the term of the 4.375% 2026 Notes.
 
On July 15, 2021, the Company issued an additional
$125.0 million in aggregate principal amount of the 4.375% 2026 Notes (the “Additional 4.375% 2026 Notes”) for net proceeds
for approximately $123.8 million, based on the public offering price of 101.00% of the aggregate principal amount of the Additional 4.375%
2026 Notes, after deducting the underwriting commissions of $2.5 million. Offering costs incurred were approximately $0.2 million. The
Additional 4.375% 2026 Notes are treated as a single series with the existing 4.375% 2026 Notes under the indenture and have the same
terms as the existing 4.375% 2026 Notes. The net proceeds from the offering were used to redeem all of the outstanding 6.25% 2025 Notes
(as described above), and for general corporate purposes in accordance with the Company’s investment objective and strategies. Financing
costs of $2.7 million have been capitalized and are being amortized over the term of the additional 4.375% 2026 Notes. 
 
As of February 29, 2024, the total 4.375%
2026 Notes outstanding was $175.0 million. The 4.375% 2026 Notes are not listed and are issued in minimum denominations of $2,000
and integral multiples of $1,000 in excess thereof. The carrying amount of the outstanding 4.375% 2026 Notes had a fair value of
$163.4 million, which is based on a market yield analysis and would be classified as a Level 3 liability within the fair value
hierarchy. As of February 28, 2023, the total 4.375% 2026 Notes outstanding was $175.0 million, and they had a fair value of $156.1
million, which is based on a market yield analysis and would be classified as a Level 3 liability within the fair value hierarchy. As of February 28, 2023, there was $175.0 million outstanding. 



F-58
 

 

 
For the years ended February 29, 2024 and February
28, 2023, we recorded $7.7 million and $7.7 million, respectively, of interest expense, $0.8 million and $0.8 million, respectively, of
amortization of deferred financing costs and $0.3 million and $0.3 million, respectively, of amortization of premium on issuance of 4.375%
Notes due 2026 (inclusive of the issuance of the Additional 4.375% 2026 Notes). Interest expense, amortization of deferred financing costs
and amortization of premium on issuance of notes are reported as interest and debt financing expense on the consolidated statements of
operations. During the years ended February 29, 2024 and February 28, 2023, the average dollar amount of 4.375% 2026 Notes outstanding
was $175.0 million and $175.0 million respectively.
 
4.35% 2027 Notes
 
On January 19, 2022, the Company issued $75.0
million in aggregate principal amount of 4.35% fixed-rate notes due in 2027 (the “4.35% 2027 Notes”) for net proceeds of $73.0
million, based on the public offering price of 99.317% of the aggregate principal amount of the 4.35% 2027 Notes, after deducting the
underwriting commissions of approximately $1.5 million. Offering costs incurred were approximately $0.3 million. Interest on
the 4.35% 2027 Notes is paid semi-annually in arrears on February 28 and August 28, at a rate of 4.35% per year. The 4.35% 2027 Notes
mature on February 28, 2027 and may be redeemed in whole or in part at the Company’s option at any time prior to November 28, 2026,
at par plus a “make-whole” premium, and thereafter at par. The net proceeds from the offering were used for general corporate
purposes in accordance with the Company’s investment objective and strategies. Financing costs of $1.8 million related to the
4.35% 2027 Notes have been capitalized and are being amortized over the term of the 4.35% 2027 Notes.
 
As of February 29, 2024, the total 4.35%
2027 Notes outstanding was $75.0 million. The 4.35% 2027 Notes are not listed. The carrying amount of the outstanding 4.35% 2027
Notes had a fair value of $67.8 million, which is based on a market yield analysis and would be classified as a Level 3 liability
within the fair value hierarchy. As of February 28, 2023, the total 4.35% 2027 Notes outstanding was $75.0 million, and they had a
fair value of $64.5 million, which is based on a market yield analysis and would be classified as a Level 3 liability within the
fair value hierarchy. As of February 28, 2023, there was $75.0 million outstanding.
 
For the years ended February 29, 2024 and February
28, 2023, we recorded $3.3 million and $3.3 million, respectively, of interest expense, $0.3 million and $0.3 million, respectively, of
amortization of deferred financing costs and $0.10 million and $0.09 million, respectively, of amortization of discount on issuance of
4.35% Notes due 2027 (inclusive of the issuance of the Additional 4.35% 2027 Notes). Interest expense, amortization of deferred financing
costs and amortization of discount on issuance of notes are reported as interest and debt financing expense on the consolidated statements
of operations. During the years ended February 29, 2024 and February 28, 2023, the average dollar amount of 4.35% 2027 Notes outstanding
was $75.0 million and $75.0 million respectively.
 
6.00% 2027 Notes
 
On April 27, 2022, the Company issued $87.5 million
in aggregate principal amount of 6.00% fixed-rate notes due 2027 (the “6.00% 2027 Notes”) for net proceeds of $84.8 million
after deducting underwriting commissions of approximately $2.7 million. Offering costs incurred were approximately $0.1 million. On May
10, 2022, the underwriters partially exercised their option to purchase an additional $10.0 million in aggregate principal amount of the
6.00% 2027 Notes. Net proceeds to the Company were $9.7 million after deducting underwriting commissions of approximately $0.3 million.
Interest on the 6.00% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 6.00% per
year. The 6.00% 2027 Notes mature on April 30, 2027 and commencing April 27, 2024, may be redeemed in whole or in part at any time or
from time to time at the Company’s option. The net proceeds from the offering were used for general corporate purposes in accordance
with the Company’s investment objective and strategies. Financing costs of $3.3 million related to the 6.00% 2027 Notes have been
capitalized and are being amortized over the term of the 6.00% 2027 Notes. The 6.00% 2027 Notes are listed on the NYSE under the trading
symbol “SAT” with a par value of $25.00 per note.
 
On August 15, 2022, the Company issued an additional
$8.0 million in aggregate principal amount of the 6.00% 2027 Notes (the “Additional 6.00% 2027 Notes”) for net proceeds of
$7.8 million, based on the public offering price of 97.80% of the aggregate principal amount of the 6.00% 2027 Notes. Additional offering
costs incurred were approximately $0.2 million. The Additional 6.00% 2027 Notes are treated as a single series with the existing 6.00%
2027 Notes under the indenture and have the same terms as the existing 6.00% 2027 Notes. The net proceeds from the offering were used
for general corporate purposes in accordance with the Company’s investment objective and strategies. Additional financing costs
of $0.3 million related to the 6.00% 2027 Notes have been capitalized and are being amortized over the term of the 6.00% 2027 Notes.  



F-59
 

 
As of February 29, 2024, the total 6.00% 2027
Notes outstanding was $105.5 million. The 6.00% 2027 Notes are listed on the NYSE under the trading symbol “SAT” with a par
value of $25.00 per note. As of February 29, 2024, the carrying amount and fair value of the 6.00% 2027 Notes was $105.5 million and $100.7
million, respectively. The fair value of the 6.00% 2027 Notes, which are publicly traded, is based upon closing market quotes as of the
measurement date and would be classified as a Level 1 liability within the fair value hierarchy. As of February 28, 2023, the carrying amount and fair value of the 6.00% 2027 Notes was $105.5 million and $100.4
million, respectively.
 
For the years ended February 29, 2024 and February
28, 2023, we recorded $6.3 million and $5.3 million, respectively, of interest expense, $0.7 million and $0.6 million, respectively, of
amortization of deferred financing costs related to the 6.00% Notes due 2027. Interest expense and amortization of deferred financing
costs are reported as interest and debt financing expense on the consolidated statements of operations. During the years ended February
29, 2024 and February 28, 2023, the average dollar amount of 6.00% 2027 Notes outstanding was $105.5 million and $100.4 million respectively.
 
7.00% 2025 Notes 
 
On September 8, 2022, the Company issued $12.0
million in aggregate principal amount of 7.00% fixed-rate notes due 2025 (the “7.00% 2025 Notes”) for net proceeds of $11.6
million after deducting underwriting discounts of approximately $0.4 million. Additional offering costs incurred were approximately $0.05
million. Interest on the 7.00% 2025 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of
7.00% per year. The 7.00% 2025 Notes mature on September 8, 2025 and commencing September 8, 2024, may be redeemed in whole or in part
at any time or from time to time at the Company’s option. The net proceeds from the offering were used for general corporate purposes
in accordance with the Company’s investment objective and strategies. Financing costs of $0.04 million related to the 7.00% 2025
Notes have been capitalized and are being amortized over the term of the 7.00% 2025 Notes.
 
As of February 29, 2024, the total 7.00%
2025 Notes outstanding was $12.0 million. The 7.00% 2025 Notes are not listed. The carrying amount of the outstanding 7.00% 2025
Notes had a fair value of $11.8 million, which is based on a market yield analysis and would be classified as a Level 3 liability
within the fair value hierarchy. As of February 28, 2023, the total 7.00% 2025 Notes outstanding was $12.0 million, and they had a
fair value of $11.5 million, which is based on a market yield analysis and would be classified as a Level 3 liability within the
fair value hierarchy. As of February 28, 2023, there was $12.0 million outstanding.
 
For the years ended February 29, 2024 and February
28, 2023, we recorded $0.8 million and $0.4 million, respectively, of interest expense, $0.01 million and $0.01 million, respectively,
of amortization of deferred financing costs and $0.1 million and $0.06 million, respectively, of amortization of discount on issuance
of 7.00% Notes due 2025. Interest expense, amortization of deferred financing costs and amortization of discount on issuance of notes
are reported as interest and debt financing expense on the consolidated statements of operations. During the years ended February 29,
2024 and February 28, 2023, the average dollar amount of 7.00% 2025 Notes outstanding was $12.0 million and $5.8 million respectively.
 
8.00% 2027 Notes
 
On October 27, 2022, the Company issued $40.0
million in aggregate principal amount of our 8.00% fixed-rate notes due 2027 (the “8.00% 2027 Notes”) for net proceeds of
$38.7 million after deducting underwriting commissions of approximately $1.3 million. Offering costs incurred were approximately $0.2
million. On November 10, 2022, the underwriters partially exercised their option to purchase an additional $6.0 million in aggregate principal
amount of the 8.00% 2027 Notes. Net proceeds to the Company were $5.8 million after deducting underwriting commissions of approximately
$0.2 million. Interest on the 8.00% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate
of 8.00% per year. The 8.00% 2027 Notes mature on October 31, 2027 and commencing October 27, 2024, may be redeemed in whole or in part
at any time or from time to time at the Company’s option. The net proceeds from the offering were used for general corporate purposes
in accordance with the Company’s investment objective and strategies. Financing costs of $1.7 million related to the 8.00% 2027
Notes have been capitalized and are being amortized over the term of the 8.00% 2027 Notes. 



F-60
 

 
As of February 29, 2024, the total 8.00% 2027
Notes outstanding was $46.0 million. The 8.00% 2027 Notes are listed on the NYSE under the trading symbol “SAJ” with a par
value of $25.00 per note. As of February 29, 2024, the carrying amount and fair value of the 8.00% 2027 Notes was $46.0 million and $46.2
million, respectively. The fair value of the 8.00% 2027 Notes, which are publicly traded, is based upon closing market quotes as of the
measurement date and would be classified as a Level 1 liability within the fair value hierarchy. As of February 28, 2023, the carrying amount and fair value of the 8.00% 2027 Notes was $46.0 million and $46.4
million, respectively.
 
For the years ended February 29, 2024 and February
28, 2023, the Company recorded $3.7 million and $1.3 million, respectively, of interest expense and $0.3 million and $0.1 million, respectively,
of amortization of deferred financing costs related to the 8.00% 2027 Notes. Interest expense and amortization of deferred financing
costs are reported as interest and debt financing expense on the consolidated statements of operations. During the years ended February
29, 2024 and February 28, 2023, the average dollar amount of 8.00% 2027 Notes outstanding was $46.0 million and $15.7 million, respectively.
 
8.125% 2027 Notes
 
On December 13, 2022, the Company issued $52.5
million in aggregate principal amount of 8.125% fixed-rate notes due 2027 (the “8.125% 2027 Notes”) for net proceeds of $50.8
million after deducting underwriting commissions of approximately $1.6 million. Offering costs incurred were approximately $0.1 million.
On December 21, 2022, the underwriters fully exercised their option to purchase an additional $7.9 million in aggregate principal amount
of the 8.125% 2027 Notes. Net proceeds to the Company were $7.6 million after deducting underwriting commissions of approximately $0.2
million. Interest on the 8.125% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of
8.125% per year. The 8.125% 2027 Notes mature on December 31, 2027 and commencing December 13, 2024, may be redeemed in whole or in part
at any time or from time to time at the Company’s option. The net proceeds from this offering were used to make investments in middle-market
companies (including investments made through our SBIC Subsidiaries) in accordance with the Company’s investment objective and strategies
and for general corporate purposes. Financing costs of $2.0 million related to the 8.125% 2027 Notes have been capitalized and are being
amortized over the term of the 8.125% 2027 Notes.
 
As of February 29, 2024, the total 8.125% 2027
Notes outstanding was $60.4 million. The 8.125% 2027 Notes are listed on the NYSE under the trading symbol “SAY” with a par
value of $25.00 per note. As of February 29, 2024, the carrying amount and fair value of the 8.125% 2027 Notes was $60.4 million and $60.8
million, respectively. The fair value of the 8.125% 2027 Notes, which are publicly traded, is based upon closing market quotes as of the
measurement date and would be classified as a Level 1 liability within the fair value hierarchy. As of February 28, 2023, the carrying amount and fair value of the 8.125% 2027 Notes was $60.4 million and $61.1
million, respectively.
 
For the years ended February 29, 2024 and February
28, 2023, the Company recorded $4.9 million and $1.1 million, respectively, of interest expense and $0.4 million and $0.09 million, respectively,
of amortization of deferred financing costs related to the 8.125% 2027 Notes. Interest expense and amortization of deferred financing
costs are reported as interest and debt financing expense on the consolidated statements of operations. During the years ended February
29, 2024 and February 28, 2023, the average dollar amount of 8.125% 2027 Notes outstanding was $60.4 million and $13.2 million, respectively.
 
8.75% 2025 Notes
 
On March 31, 2023, the Company issued $10.0 million
in aggregate principal amount of 8.75% fixed-rate notes due 2024 (the “8.75% 2025 Notes”) for net proceeds of $9.7 million
after deducting underwriting discounts of approximately $0.4 million. On May 1, 2023, the Company issued an additional $10.0 million in
aggregate principal amount of the 8.75% 2025 Notes for net proceeds of $9.7 million after deducting underwriting discounts of approximately
$0.4 million. Offering costs incurred were approximately $0.03 million. Interest on the 8.75% 2025 Notes is paid quarterly in arrears
on February 28, May 31, August 31 and November 30, at a rate of 8.75% per year. On February 2, 2024, pursuant to the terms of the indenture
governing the 8.75% 2025 Notes, the Company elected to exercise its option to extend the maturity date of the 8.75% 2025 Notes from March
31, 2024 to March 31, 2025. Net proceeds from this offering were used to make investments in middle-market companies (including investments
made through the SBIC Subsidiaries) in accordance with the Company’s investment objective and strategies and general corporate purposes.
Financing costs and discounts of $0.7 million related to the 8.75% 2025 Notes have been capitalized and are being amortized over the term
of the 8.75% 2025 Notes. 



F-61
 

 
As of February 29, 2024, the total 8.75%
2025 Notes outstanding was $20.0 million. The 8.75% 2025 Notes are not listed. The carrying amount of the outstanding 8.75% 2025
Notes had a fair value of $20.1 million, which is based on a market yield analysis and would be classified as a Level 3 liability
within the fair value hierarchy. As of February 28, 2023, the total 8.75% 2025 Notes outstanding was $0.0 million, and they had a fair value of
$0.0 million. As of February 28, 2023, there was $0.0 million outstanding.
 
For the years ended February 29, 2024 and February
28, 2023, we recorded $1.5 million and $0.0 million, respectively, of interest expense, $0.02 million and $0.0 million, respectively,
of amortization of deferred financing costs and $0.6 million and $0.0 million, respectively, of amortization of discount on issuance of
8.75% Notes due 2025. Interest expense, amortization of deferred financing costs and amortization of discount on issuance of notes are
reported as interest and debt financing expense on the consolidated statements of operations. During the years ended February 29, 2024
and February 28, 2023, the average dollar amount of 8.75% 2025 Notes outstanding was $17.5 million and $0.0 million respectively.
 
8.50% 2028 Notes
 
On April 14, 2023, the Company issued $50.0 million
in aggregate principal amount of 8.50% fixed-rate notes due 2028 (the “8.50% 2028 Notes”) for net proceeds of $48.4 million
after deducting underwriting commissions of approximately $1.6 million. Offering costs incurred were approximately $0.03 million. On
April 26, 2023, the underwriters fully exercised their option to purchase an additional $7.5 million in aggregate principal amount of
the 8.50% 2028 Notes. Net proceeds to the Company were $7.3 million after deducting underwriting commissions of approximately $0.2 million.
Interest on the 8.50% 2028 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 8.50% per
year.  The 8.50% 2028 Notes mature on April 15, 2028, and commencing April 14, 2025, may be redeemed in whole or in part at any
time or from time to time at the Company’s option. Net proceeds from this offering were used to repay a portion of the outstanding
indebtedness under the Encina Credit Facility, make investments in middle-market companies (including investments made through our SBIC
Subsidiaries) in accordance with the Company’s investment objective and strategies and for general corporate purposes. Financing
costs of $2.0 million related to the 8.50% 2028 Notes have been capitalized and are being amortized over the term of the 8.50% 2028 Notes.
 
As of February 29, 2024, the total 8.50% 2028
Notes outstanding was $57.5 million. The 8.50% 2028 Notes are listed on the NYSE under the trading symbol “SAZ” with a par
value of $25.00 per note. As of February 29, 2024, the carrying amount and fair value of the 8.50% 2028 Notes was $57.5 million and $58.3
million, respectively. The fair value of the 8.50% 2028 Notes, which are publicly traded, is based upon closing market quotes as of the
measurement date and would be classified as a Level 1 liability within the fair value hierarchy. As of February 28, 2023, the carrying amount and fair value of the 8.50% 2028 Notes was $0.0 million and $0.0
million, respectively.
 
For the years ended February 29, 2024 and February
28, 2023, we recorded $4.3 million and $0.0 million, respectively, of interest expense and $0.4 million and $0.0 million, respectively,
of amortization of deferred financing costs of 8.50% 2028 Notes. Interest expense and amortization of deferred financing costs are reported
as interest and debt financing expense on the consolidated statements of operations. During the years ended February 29, 2024 and February
28, 2023, the average dollar amount of 8.50% 2028 Notes outstanding was $50.2 million and $0.0 million respectively.
 
Senior Securities
 
Information about our senior securities is shown
in the following table as of February 28/29 for the fiscal years indicated in the table, unless otherwise noted. See “Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Financial condition, liquidity and capital resources”
for more detailed information regarding the senior securities. 



F-62
 

 
SENIOR SECURITIES
(dollar amounts in thousands, except per share
data)
 


Class and Year (1)(2) 
Total Amount Outstanding Exclusive of Treasury Securities(3)  
Asset Coverage per Unit(4)  
Involuntary Liquidating Preference per Share(5)  
Average Market Value per Share(6) 

  
(in thousands) 

Credit Facility with Encina Lender Finance, LLC 
   
   
   
  

Fiscal year 2024 (as of February 29, 2024) 
$35,000  
$1,610  
     -  
 N/A 

Fiscal year 2023 (as of February 28, 2023) 
$32,500  
$1,659  
 -  
 N/A 

Fiscal year 2022 (as of February 28, 2022) 
$12,500  
$2,093  
 -  
 N/A 

Credit Facility with Madison Capital Funding(14) 
    
    
    
   

Fiscal year 2021 (as of February 28, 2021) 
$-  
$3,471  
 -  
 N/A 

Fiscal year 2020 (as of February 29, 2020) 
$-  
$6,071  
 -  
 N/A 

Fiscal year 2019 (as of February 28, 2019) 
$-  
$2,345  
 -  
 N/A 

Fiscal year 2018 (as of February 28, 2018) 
$-  
$2,930  
 -  
 N/A 

Fiscal year 2017 (as of February 28, 2017) 
$-  
$2,710  
 -  
 N/A 

Fiscal year 2016 (as of February 29, 2016) 
$-  
$3,025  
 -  
 N/A 

Fiscal year 2015 (as of February 28, 2015) 
$9,600  
$3,117  
 -  
 N/A 

Fiscal year 2014 (as of February 28, 2014) 
$-  
$3,348  
 -  
 N/A 

Fiscal year 2013 (as of February 28, 2013) 
$24,300  
$5,421  
 -  
 N/A 

Fiscal year 2012 (as of February 29, 2012) 
$20,000  
$5,834  
 -  
 N/A 

Fiscal year 2011 (as of February 28, 2011) 
$4,500  
$20,077  
 -  
 N/A 

7.50% Notes due 2020(7) 
    
    
    
   

Fiscal year 2017 (as of February 28, 2017) 
$-  
$-  
 -  
 N/A 

Fiscal year 2016 (as of February 29, 2016) 
$61,793  
$3,025  
 -  
$25.24(8)

Fiscal year 2015 (as of February 28, 2015) 
$48,300  
$3,117  
 -  
$25.46(8)

Fiscal year 2014 (as of February 28, 2014) 
$48,300  
$3,348  
 -  
$25.18(8)

6.75% Notes due 2023(9) 
    
    
    
   

Fiscal year 2020 (as of February 29, 2020) 
$-  
$-  
 -  
 N/A 

Fiscal year 2019 (as of February 28, 2019) 
$74,451  
$2,345  
 -  
$25.74(10)

Fiscal year 2018 (as of February 28, 2018) 
$74,451  
$2,930  
 -  
$26.05(10)

Fiscal year 2017 (as of February 28, 2017) 
$74,451  
$2,710  
 -  
$25.89(10)

8.75% Notes due 2025 
    
    
    
   

Fiscal year 2024 (as of February 29, 2024) 
$20,000  
$1,610  
 -  
$25.00(12)

6.25% Notes due 2025(13) 
    
    
    
   

Fiscal year 2022 (as of February 28, 2022) 
 -  
 -  
 -  
  N/A  

Fiscal year 2021 (as of February 28, 2021) 
$60,000  
$3,471  
 -  
$24.24(11)

Fiscal year 2020 (as of February 29, 2020) 
$60,000  
$6,071  
 -  
$25.75(11)

Fiscal year 2019 (as of February 28, 2019) 
$60,000  
$2,345  
 -  
$24.97(11)
 



F-63
 

 
SENIOR SECURITIES
(dollar amounts in thousands, except per share
data)
 


Class and Year (1)(2) 
Total Amount Outstanding Exclusive of Treasury Securities(3)  
Asset Coverage per Unit(4)  
Involuntary Liquidating Preference per Share(5)  
Average Market Value per Share(6) 

  
(in thousands) 

7.00% Notes due 2025 
    
    
    
   

Fiscal year 2024 (as of February 29, 2024) 
$12,000  
$1,610  
 -  
$25.00(12)

Fiscal year 2023 (as of February 28, 2023) 
$12,000  
$1,659  
 -  
$25.00(12)

7.25% Notes due 2025(16) 
    
    
    
   

Fiscal year 2023 (as of February 28, 2023) 
 -  
 -  
 -  
  N/A  

Fiscal year 2022 (as of February 28, 2022) 
$43,125  
$2,093  
 -  
$25.46(11)

Fiscal year 2021 (as of February 28, 2021) 
$43,125  
$3,471  
 -  
$25.77(11)

7.75% Notes due 2025 
    
    
    
   

Fiscal year 2024 (as of February 29, 2024) 
$5,000  
$1,610  
 -  
$25.00(12)

Fiscal year 2023 (as of February 28, 2023) 
$5,000  
$1,659  
 -  
$25.00(12)

Fiscal year 2022 (as of February 28, 2022) 
$5,000  
$2,093  
 -  
$25.00(12)

Fiscal year 2021 (as of February 28, 2021) 
$5,000  
$3,471  
 -  
$25.00(12)

4.375% Notes due 2026 
    
    
    
   

Fiscal year 2024 (as of February 29, 2024) 
$175,000  
$1,610  
 -  
$25.00(12)

Fiscal year 2023 (as of February 28, 2023) 
$175,000  
$1,659  
 -  
$25.00(12)

Fiscal year 2022 (as of February 28, 2022) 
$175,000  
$2,093  
 -  
$25.00(12)

4.35% Notes due 2027 
    
    
    
   

Fiscal year 2024 (as of February 29, 2024) 
$75,000  
$1,610  
 -  
$25.00(12)

Fiscal year 2023 (as of February 28, 2023) 
$75,000  
$1,659  
 -  
$25.00(12)

Fiscal year 2022 (as of February 28, 2022) 
$75,000  
$2,093  
 -  
$25.00(12)

6.00% Notes due 2027 
    
    
    
   

Fiscal year 2024 (as of February 29, 2024) 
$105,500  
$1,610  
 -  
$23.51(15)

Fiscal year 2023 (as of February 28, 2023) 
$105,500  
$1,659  
 -  
$23.97(15)

6.25% Notes due 2027 
    
    
    
   

Fiscal year 2024 (as of February 29, 2024) 
$15,000  
$1,610  
 -  
$25.00(12)

Fiscal year 2023 (as of February 28, 2023) 
$15,000  
$1,659  
 -  
$25.00(12)

Fiscal year 2022 (as of February 28, 2022) 
$15,000  
$2,093  
 -  
$25.00(12)

Fiscal year 2021 (as of February 28, 2021) 
$15,000  
$3,471  
 -  
$25.00(12)

8.00% Notes due 2027 
    
    
    
   

Fiscal year 2024 (as of February 29, 2024) 
$46,000  
$1,610  
 -  
$25.00(15)

8.125% Notes due 2027 
    
    
    
   

Fiscal year 2024 (as of February 29, 2024) 
$60,375  
$1,610  
 -  
$25.05(15)

Fiscal year 2023 (as of February 28, 2023) 
$60,375  
$1,659  
 -  
$25.10(15)

8.50% Notes due 2028 
    
    
    
   

Fiscal year 2024 (as of February 29, 2024) 
$57,500  
$1,610  
 -  
$25.17(17)
 

 


(1)We have excluded our SBA-guaranteed debentures from
this table because the SEC has granted us exemptive relief that permits us to exclude such debentures from the definition of senior securities
in the 150% asset coverage ratio we are required to maintain under the 1940 Act.

 

(2)This table does not include the senior securities of our predecessor
entity, GSC Investment Corp., relating to a revolving securitized credit facility with Deutsche Bank, in light of the fact that the Company
was under different management during the time that such credit facility was outstanding.

 

(3)Total amount of senior securities outstanding at the end of
the period presented.

 

(4)Asset coverage per unit is the ratio of our total assets, less
all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness.
Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness, calculated on a total basis.
 



F-64
 

 

(5)The amount to which such class of senior security would be entitled
upon the involuntary liquidation of the issuer in preference to any security junior to it. The “—” indicates information
which the Securities and Exchange Commission expressly does not require to be disclosed for certain types of senior securities.

 

(6)Not applicable for credit facility because not registered for
public trading.

 

(7)On January 13, 2017, the Company redeemed in full its 2020
Notes. The Company used a portion of the net proceeds from the 2023 Notes offering, which was completed in December 2016, to redeem the
2020 Notes in full.

 

(8)Based on the average daily trading price of the 2020 Notes on
the NYSE.

 

(9)On December 21, 2019 and February 7, 2020, the Company redeemed
$50.0 million and $24.45 million, respectively, in aggregate principal amount of the $74.45 million in aggregate principal amount of
issued and outstanding 2023 Notes.

 

(10)Based on the average daily trading price of the 2023 Notes on
the NYSE.

 

(11)Based on the average daily trading price of the 2025 Notes on
the NYSE.

 

(12)The carrying value of this unlisted security approximates its
fair value, based on a waterfall analysis showing adequate collateral coverage.

 

(13)On August 31, 2021, the Company redeemed $60.0 million in aggregate
principal amount of the issued and outstanding 6.25% 2025 Notes. The Company used a portion of the net proceeds from the 4.375% 2026
Notes offering, which was completed in July 2021, to redeem the 6.25% 2025 Notes in full.

 

(14)On October 4, 2021, the Company repaid all remaining amounts
outstanding under the Madison Credit Facility and the credit agreement relating to the Madison Credit Facility was terminated.

 

(15)Based on the average daily trading price of the 2027 Notes on
the NYSE.

 

(16)On July 14, 2022, the Company redeemed $43.1 million in aggregate
principal amount of the issued and outstanding 7.25% 2025 Notes.

 

(17)Based on the average daily trading price of the 2028 Notes on
the NYSE.


 
Note 9. Commitments and Contingencies
 
Contractual Obligations
 
The following table shows our payment obligations for repayment
of debt and other contractual obligations at February 29, 2024:
 


  
   
Payment Due by Period 

Long-Term Debt Obligations 
Total  
Less Than  1 Year  
1 - 3 Years  
3 - 5 Years  
More Than 5 Years 

  
($ in thousands) 

Encina credit facility 
$35,000  
$       -  
$35,000  
$-  
$- 

SBA debentures 
 214,000  
 -  
 -  
 -  
 214,000 

8.75% 2025 Notes 
 20,000  
 -  
 20,000  
 -  
 - 

7.00% 2025 Notes 
 12,000  
 -  
 12,000  
 -  
 - 

7.75% 2025 Notes 
 5,000  
 -  
 5,000  
 -  
 - 

4.375% 2026 Notes 
 175,000  
 -  
 175,000  
 -  
 - 

4.35% 2027 Notes 
 75,000  
 -  
 75,000  
 -  
 - 

6.00% 2027 Notes 
 105,500  
 -  
 -  
 105,500  
 - 

6.25% 2027 Notes 
 15,000  
 -  
 -  
 15,000  
 - 

8.00% 2027 Notes 
 46,000  
 -  
 -  
 46,000  
 - 

8.125% 2027 Notes 
 60,375  
 -  
 -  
 60,375  
 - 

8.50% 2028 Notes 
 57,500  
 -  
 -  
 57,500  
 - 

Total Long-Term Debt Obligations 
$820,375  
$-  
$322,000  
$284,375  
$214,000 
 



F-65
 

 
Off-balance Sheet Arrangements
 
At February 29, 2024 and February 28, 2023, the
Company’s off-balance sheet arrangements consisted of $132.4 million and $108.8 million, respectively, of unfunded commitments outstanding
to provide debt financing to its portfolio companies or to fund limited partnership interests. Such commitments are generally up to the
Company’s discretion to approve, or the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees,
elements of credit risk in excess of the amount recognized in the Company’s consolidated statements of assets and liabilities and
are not reflected in the Company’s consolidated statements of assets and liabilities.
 
A summary of the unfunded commitments outstanding as of February 29, 2024 and February 28, 2023 is shown in the table below (dollars in thousands):
       
 


  
February 29, 
2024  
February 28, 
2023 

At Company’s discretion 
   
  

ActiveProspect, Inc. 
$10,000  
$10,000 

Artemis Wax Corp. 
 23,500  
 - 

Ascend Software, LLC 
 5,000  
 5,000 

Granite Comfort, LP 
 750  
 15,000 

JDXpert 
 5,000  
 5,000 

LFR Chicken LLC 
 -  
 4,000 

Pepper Palace, Inc. 
 1,898  
 3,000 

Procurement Partners, LLC 
 4,250  
 4,250 

Saratoga Senior Loan Fund I JV, LLC 
 8,548  
 8,548 

Sceptre Hospitality Resources, LLC 
 5,000  
 5,000 

Stretch Zone Franchising, LLC 
 3,750  
 - 

VetnCare MSO, LLC 
 10,000  
 - 

Total 
$77,696  
$59,798 

  
    
   

At portfolio company’s discretion - satisfaction of certain financial and nonfinancial covenants required 
    
   

Alpha Aesthetics Partners OpCo, LLC 
$6,500  
$- 

ARC Health OpCo LLC 
 2,585  
 10,773 

Artemis Wax Corp. 
 -  
 8,500 

Ascend Software, LLC 
 -  
 3,200 

Axero Holdings, LLC - Revolver 
 500  
 500 

Axiom Medical Consulting, LLC 
 2,000  
 - 

BQE Software, Inc. 
 3,250  
 - 

C2 Educational Systems 
 3,000  
 - 

Davisware, LLC 
 750  
 - 

Exigo, LLC 
 -  
 4,167 

Exigo, LLC - Revolver 
 1,042  
 833 

Gen4 Dental Partners Holdings, LLC 
 -  
 11,000 

GoReact 
 2,500  
 2,500 

Granite Comfort, LP 
 11,637  
 - 

JDXpert 
 -  
 1,000 

Inspect Point Holding, LLC 
 1,500  
 - 

Pepper Palace, Inc. - Delayed Draw Term Loan 
 -  
 2,000 

Pepper Palace, Inc. - Revolver 
 2,500  
 2,500 

Procurement Partners, LLC 
 -  
 1,000 

Stretch Zone Franchising, LLC 
 1,500  
 - 

VetnCare MSO, LLC 
 15,319  
 - 

Zollege PBC 
 150  
 1,000 

  
 54,733  
 48,973 

Total 
$132,429  
$108,771 

 
The Company believes its assets will provide adequate
coverage to satisfy these unfunded commitments. As of February 29, 2024, the Company had cash and cash equivalents of $8.7 million and
$31.8 million in available borrowings under the Encina Credit Facility.
 


F-66
 

 
Note 10. Directors Fees
 
The independent directors each receive an annual
fee of $70,000. They also receive $3,000 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending
each board meeting and receive $1,500 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each
committee meeting. In addition, the chairman of the Audit Committee receives an annual fee of $12,500 and the chairman of each other committee
of the board of directors receives an annual fee of $6,000 for their additional services in these capacities. In addition, we have purchased
directors’ and officers’ liability insurance on behalf of our directors and officers. Independent directors have the option
to receive their directors’ fees in the form of our common stock issued at a price per share equal to the greater of NAV or the
market price at the time of payment. No compensation is paid to directors who are “interested persons” of the Company (as
defined in Section 2(a)(19) of the 1940 Act). No compensation is paid to directors who are “interested persons” of the Company
(as defined in Section 2(a)(19) of the 1940 Act). For the years ended February 29, 2024, February 28, 2023 and February 28, 2022, we incurred
$0.4 million, $0.4 million and $0.3 million for directors’ fees and expenses, respectively. As of February 29, 2024 and February
28, 2023, $0.0 million and $0.01 million in directors’ fees and expenses were accrued and unpaid, respectively. As of February 29,
2024, we had not issued any common stock to our directors as compensation for their services.
 
Note 11. Stockholders’ Equity 
 
Share Repurchases 
 
On September 24, 2014, the Company announced the
approval of an open market share repurchase plan that originally allowed it to repurchase up to 200,000 shares of its common stock at
prices below its NAV as reported in its then most recently published consolidated financial statements (the “Share Repurchase Plan”).
Since September 24, 2014, the Share Repurchase Plan has been extended annually, and the Company has periodically increased the amount
of shares of common stock that may be purchased under the Share Repurchase Plan, most recently to 1.7 million shares of common stock.
On January 8, 2024, the Company’s board of directors extended the Share Repurchase Plan for another year to January 15, 2025. As
of February 29, 2024, the Company purchased 1,035,203 shares of common stock, at the average price of $22.05 for approximately $22.8 million
pursuant to the Share Repurchase Plan. During the three months ended February 29, 2024, the Company did not purchase any shares of common
stock pursuant to the Share Repurchase Plan. During the year ended February 29, 2024, the Company purchased 88,576 shares of common stock,
at the average price $24.36 for approximately $2.2 million pursuant to the Share Repurchase Plan.
  
 Public Equity Offering
 
On July 13, 2018, the Company issued 1,150,000
shares of its common stock priced at $25.00 per share (par value $0.001 per share) at an aggregate total of $28.75 million. The net proceeds,
after deducting underwriting commissions of $1.15 million and offering costs of approximately $0.2 million, amounted to approximately
$27.4 million. The Company also granted the underwriters a 30-day option to purchase up to an additional 172,500 shares of its common
stock, which was not exercised. 
 
Equity ATM Program
 
On March 16, 2017, the Company entered into an
equity distribution agreement with Ladenburg Thalmann & Co. Inc., through which the Company offered for sale, from time to time, up
to $30.0 million of the Company’s common stock through an ATM offering. Subsequent to this, BB&T Capital Markets and B. Riley
FBR, Inc. were also added to the agreement. On July 11, 2019, the amount of the common stock to be offered was increased to $70.0 million,
and on October 8, 2019, the amount of the common stock to be offered was increased to $130.0 million. This agreement was terminated as
of July 29, 2021, and as of that date, the Company had sold 3,922,018 shares for gross proceeds of $97.1 million at an average price of
$24.77 for aggregate net proceeds of $95.9 million (net of transaction costs).
 
On July 30, 2021, the Company entered
into an equity distribution agreement (the “Equity Distribution Agreement”) with Ladenburg Thalmann & Co. Inc. and Compass
Point Research and Trading, LLC (collectively the “Agents”), through which the Company may offer for sale, from time to time,
up to $150.0 million of the Company’s common stock through the Agents, or to them, as principal for their account (the “ATM
Program”).
 
On July 6, 2023, the Equity Distribution Agreement
was amended to increase the maximum amount of shares of our common stock to be sold through the ATM Program to $300.0 million from $150.0
million, and on July 19, 2023, the Equity Distribution Agreement was amended to add an additional distribution agent, Raymond James &
Associates. The sales price per share of the Company’s common stock offered under the ATM Program, less the Agents’ commission,
will not be less than the NAV per share of the Company’s common stock at the time of such sale. Consistent with the terms of the
ATM Program, the Manager may, from time to time and in its sole discretion, contribute proceeds necessary to ensure that no sales are
made at a price below the then-current NAV per share. 



F-67
 

 
As of February 29, 2024 the Company sold 6,543,878
shares for gross proceeds of $172.5 million at an average price of $26.37 for aggregate net proceeds of $171.0 million (net of transaction
costs). During the three months ended February 29, 2024, the Company sold 501,105 shares for gross proceeds of $14.3 million at an average
price of $28.44 for aggregate net proceeds of $14.3 million (net of transaction costs). During the year ended February 29, 2024, the Company
sold 1,703,517 shares for gross proceeds of $49.0 million at an average price of $28.51 for aggregate net proceeds of $49.0 million (net
of transaction costs). The Manager agreed to reimburse the Company to the extent the per share price of the shares to the public, less
underwriting fees, was less than net asset value per share. For the three months ended February 29, 2024, the Manager reimbursed the Company
$1.4 million. For the year ended February 29, 2024, the Manager reimbursed the Company $4.5 million.
 
The Company adopted Rule 3-04/Rule 8-03(a)(5) under Regulation S-X (Note 2). Pursuant to Regulation S-X, the Company has presented a reconciliation
of the changes in each significant caption of stockholders’ equity as shown in the tables below:
 


  
   
   
   
Total  
  

  
Common Stock  
Capital in Excess  
Distributable Earnings  
  

  
Shares  
Amount  
of Par Value  
(Loss)  
Net Assets 

Balance at February 28, 2022 
 12,131,350  
$12,131  
$328,062,246  
$27,706,146  
$355,780,523 

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 7,976,222  
 7,976,222 

Net realized gain (loss) from investments 
 -  
 -  
 -  
 162,509  
 162,509 

Income tax (provision) benefit from realized gain on investments 
 -  
 -  
 -  
 69,250  
 69,250 

Net change in unrealized appreciation (depreciation) on investments 
 -  
 -  
 -  
 (9,333,449) 
 (9,333,449)

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments 
 -  
 -  
 -  
 (361,951) 
 (361,951)

Decrease from Shareholder Distributions: 
    
    
    
    
   

Distributions of investment income – net 
 -  
 -  
 -  
 (6,428,817) 
 (6,428,817)

Capital Share Transactions: 
    
    
    
    
   

Stock dividend distribution 
 42,825  
 43  
 1,108,637  
 -  
 1,108,680 

Repurchases of common stock 
 (142,177) 
 (142) 
 (3,734,174) 
 -  
 (3,734,316)

Repurchase fees 
 -  
 -  
 (2,840) 
 -  
 (2,840)

Balance at May 31, 2022 
 12,031,998  
$12,032  
$325,433,869  
$19,789,910  
$345,235,811 

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 7,698,014  
 7,698,014 

Net realized gain (loss) from investments 
 -  
 -  
 -  
 7,943,838  
 7,943,838 

Realized losses on extinguishment of debt 
 -  
 -  
 -  
 (1,204,809) 
 (1,204,809)

Net change in unrealized appreciation (depreciation) on investments 
 -  
 -  
 -  
 (13,258,456) 
 (13,258,456)

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments 
 -  
 -  
 -  
 (230,154) 
 (230,154)

Decrease from Shareholder Distributions: 
    
    
    
    
   

Distributions of investment income – net 
 -  
 -  
 -  
 (6,369,981) 
 (6,369,981)

Capital Share Transactions: 
    
    
    
    
   

Stock dividend distribution 
 48,590  
 49  
 1,088,139  
 -  
 1,088,188 

Repurchases of common stock 
 (153,350) 
 (154) 
 (3,685,951) 
 -  
 (3,686,105)

Repurchase fees 
 -  
 -  
 (3,071) 
 -  
 (3,071)

Balance at August 31, 2022 
 11,927,238  
$11,927  
$322,832,986  
$14,368,362  
$337,213,275 
 



F-68
 

 


  
   
   
   
Total  
  

  
Common Stock  
Capital
in Excess  
Distributable
Earnings  
  

  
Shares  
Amount  
of Par Value  
 (Loss)  
Net Assets 

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 9,877,437  
 9,877,437 

Net realized gain (loss) from investments 
 -  
 -  
 -  
 (740,434) 
 (740,434)

Income tax (provision) benefit from realized gain on investments 
 -  
 -  
 -  
 479,318  
 479,318 

Net change in unrealized appreciation (depreciation) on investments 
 -  
 -  
 -  
 (3,176,208) 
 (3,176,208)

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments 
 -  
 -  
 -  
 (425,848) 
 (425,848)

Decrease from Shareholder Distributions: 
    
    
    
    
   

Distributions of investment income – net 
 -  
 -  
 -  
 (6,433,298) 
 (6,433,298)

Capital Share Transactions: 
    
    
    
    
   

Stock dividend distribution 
 52,312  
 53  
 1,150,881  
 -  
 1,150,934 

Repurchases of common stock 
 (94,071) 
 (95) 
 (2,179,600) 
 -  
 (2,179,695)

Repurchase fees 
 -  
 -  
 (1,881) 
 -  
 (1,881)

Balance at November 30, 2022 
 11,885,479  
$11,885  
$321,802,386  
$13,949,329  
$335,763,600 

  
    
    
    
    
   

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 9,649,474  
 9,649,474 

Net realized gain (loss) from investments 
 -  
 -  
 -  
 80,683  
 80,683 

Realized losses on extinguishment of debt 
 -  
 -  
 -  
 (382,274) 
 (382,274)

Net change in unrealized appreciation (depreciation) on investments 
 -  
 -  
 -  
 10,549,981  
 10,549,981 

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments 
 -  
 -  
 -  
 (697,380) 
 (697,380)

Decrease from Shareholder Distributions: 
    
    
    
    
   

Distributions of investment income – net 
 -  
 -  
 -  
 (8,081,306) 
 (8,081,306)

Capital Share Transactions: 
    
    
    
    
   

Stock dividend distribution 
 53,615  
 55  
 1,300,405  
 -  
 1,300,460 

Repurchases of common stock 
 (48,594) 
 (49) 
 (1,224,175) 
 -  
 (1,224,224)

Repurchase fees 
 -  
 -  
 (972) 
 -  
 (972)

Tax reclassification of stockholders’ equity in accordance with generally accepted accounting principles 
 -  
 -  
 16,162  
 (16,162) 
 - 

Balance at February 28, 2023 
 11,890,500  
$11,891  
$321,893,806  
$25,052,345  
$346,958,042 
 



F-69
 

 


  
   
   
   
Total  
  

  
Common Stock  
Capital
in Excess  
Distributable
Earnings  
  

  
Shares  
Amount  
of Par Value  
 (Loss)  
Net Assets 

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 15,958,950  
 15,958,950 

Net realized gain (loss) from investments 
 -  
 -  
 -  
 90,691  
 90,691 

Net change in unrealized appreciation (depreciation) on investments 
 -  
 -  
 -  
 (16,322,307) 
 (16,322,307)

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments 
 -  
 -  
 -  
 59,407  
 59,407 

Decrease from Shareholder Distributions: 
    
    
    
    
   

Distributions of investment income – net 
 -  
 -  
 -  
 (8,193,402) 
 (8,193,402)

Capital Share Transactions: 
    
    
    
    
   

Stock dividend distribution 
 45,818  
 47  
 1,058,797  
 -  
 1,058,844 

Repurchases of common stock 
 (88,576) 
 (90) 
 (2,157,515) 
 -  
 (2,157,605)

Repurchase fees 
 -  
 -  
 (1,772) 
 -  
 (1,772)

Balance at May 31, 2023 
 11,847,742  
$11,848  
$320,793,316  
$16,645,684  
$337,450,848 

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 13,964,784  
 13,964,784 

Realized losses on extinguishment of debt 
 -  
 -  
 -  
 (110,056) 
 (110,056)

Net change in unrealized appreciation (depreciation) on investments 
 -  
 -  
 -  
 (5,737,571) 
 (5,737,571)

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments 
 -  
 -  
 -  
 (221,206) 
 (221,206)

Decrease from Shareholder Distributions: 
    
    
    
    
   

Distributions of investment income – net 
 -  
 -  
 -  
 (8,352,335) 
 (8,352,335)

Capital Share Transactions: 
    
    
    
    
   

Proceeds from issuance of common stock 
 852,412  
 852  
 22,497,265  
 -  
 22,498,117 

Capital contribution from Manager 
 -  
 -  
 2,050,288  
 -  
 2,050,288 

Stock dividend distribution 
 29,627  
 30  
 749,283  
 -  
 749,313 

Offfering costs 
 -  
 -  
 (213,427) 
 -  
 (213,427)

Balance at August 31, 2023 
 12,729,781  
$12,730  
$345,876,725  
$16,189,300  
$362,078,755 

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 14,166,063  
 14,166,063 

Net realized gain (loss) from investments 
 -  
 -  
 -  
 60,565  
 60,565 

Net change in unrealized appreciation (depreciation) on investments 
 -  
 -  
 -  
 (17,866,353) 
 (17,866,353)

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments 
 -  
 -  
 -  
 (415,894) 
 (415,894)

Decrease from Shareholder Distributions: 
    
    
    
    
   

Distributions of investment income – net 
 -  
 -  
 -  
 (9,286,642) 
 (9,286,642)

Capital Share Transactions: 
    
    
    
    
   

Proceeds from issuance of common stock 
 350,000  
 350  
 9,012,150  
 -  
 9,012,500 

Capital contribution from Manager 
 -  
 -  
 1,043,000  
 -  
 1,043,000 

Stock dividend distribution 
 35,196  
 35  
 858,960  
 -  
 858,995 

Offering costs 
 -  
 -  
 (92,240) 
 -  
 (92,240)

Balance at November 30, 2023 
 13,114,977  
$13,115  
$356,698,595  
$2,847,039  
$359,558,749 

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 12,784,511  
 12,784,511 

Net realized gain (loss) from investments 
 -  
 -  
 -  
 2,328  
 2,328 

Net change in unrealized appreciation (depreciation) on investments 
 -  
 -  
 -  
 (7,164,613) 
 (7,164,613)

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments 
 -  
 -  
 -  
 (315,473) 
 (315,473)

Decrease from Shareholder Distributions: 
    
    
    
    
   

Distributions of investment income – net 
 -  
 -  
 -  
 (9,803,576) 
 (9,803,576)

Capital Share Transactions: 
    
    
    
    
   

Proceeds from issuance of common stock 
 501,105  
 501  
 13,028,269  
 -  
 13,028,770 

Capital contribution from Manager 
 -  
 -  
 1,382,009  
 -  
 1,382,009 

Stock dividend distribution 
 37,394  
 38  
 915,155  
 -  
 915,193 

Offering costs 
 -  
 -  
 (163,789) 
 -  
 (163,789)

Tax reclassification of stockholders’ equity in accordance with
generally accepted accounting principles 
 -  
 -  
 (779) 
 779  
 - 

Balance at February 29, 2024 
 13,653,476  
$13,654  
$371,081,199  
$(870,745) 
$370,224,108 

 


F-70
 


Note 12. Earnings Per Share
 
In accordance with the provisions of FASB ASC
Topic 260, Earnings per Share, basic earnings per share is computed by dividing earnings available to common shareholders by the
weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings,
are considered when calculating earnings per share on a diluted basis.
 
The following information sets forth the computation
of the weighted average basic and diluted net increase in net assets resulting from operations per share for the years ended February
29, 2024, February 28, 2023 and February 28, 2022 (dollars in thousands except share and per share amounts):
 


Basic and Diluted 
February 29, 
2024  
February 28, 
2023  
February 28, 
2022 

Net increase in net assets resulting from operations 
$8,934  
$24,676  
$45,735 

Weighted average common shares outstanding 
 12,670,939  
 11,963,533  
 11,456,631 

Weighted average earnings per common share 
$0.71  
$2.06  
$3.99 

 
Note 13. Dividend 
 
We have distributed or intend to distribute sufficient
dividends to eliminate our U.S. federal taxable income for our completed tax years. If we fail to satisfy the 90% distribution requirement
or otherwise fail to qualify as a RIC in any tax year, we would be subject to U.S. federal income tax in that year on all of our taxable
income, regardless of whether we made any distributions to our shareholders. Shareholders have the option to receive payment of the dividend
in cash, or receive shares of common stock. Our distributions for the tax years ended February 29, 2024 to inception were as follows:
 



Payment
    date 
Cash Dividend 

Tax
    Year Ended February 28, 2025 
  

March
    28, 2024 
$0.73(45) 

  
$0.73 

Tax
    Year Ended February 29, 2024 
   

December
    28, 2023 
$0.72(44) 

September
    28, 2023 
 0.71(43) 

June
    29, 2023 
 0.70(42) 

March
    30, 2023 
 0.69(1) 

  
$2.82 

Tax
    Year Ended February 28, 2023 
   

January
    4, 2023 
$0.68(2) 

September
    29, 2022 
 0.54(3) 

June
    29, 2022 
 0.53(4) 

March
    28, 2022 
 0.53(5) 

  
$2.28 

Tax
    Year Ended February 28, 2022 
   

January
    19, 2022 
$0.53(6) 

September
    28, 2021 
 0.52(7) 

June
    29, 2021 
 0.44(8) 

April
    22, 2021 
 0.43(9) 

  
$1.92 

Tax
    Year Ended February 28, 2021 
   

February
    10, 2021 
$0.42(10) 

November
    10, 2020 
 0.41(11) 

August
    12, 2020 
 0.40(12) 

  
$1.03 

Tax
    Year Ended February 29, 2020 
   

February
    6, 2020 
$0.56(13) 

September
    26, 2019 
 0.56(14) 

June
    27, 2019 
 0.55(15) 

March
    28, 2019 
 0.54(16) 

  
$2.21 

Tax
    Year Ended February 28, 2019 
   

January
    2, 2019 
$0.53(17) 

September
    27, 2018 
 0.52(18) 

June
    27, 2018 
 0.51(19) 

March
    26, 2018 
 0.50(20) 

  
$2.06 

Tax
    Year Ended February 28, 2018 
   

December
    27, 2017 
$0.49(21) 

September
    26, 2017 
 0.48(22) 

June
    27, 2017 
 0.47(23) 

March
    28, 2017 
 0.46(24) 

  
$1.90 




F-71
 





Payment date 
Cash Dividend 

Tax Year Ended February 28, 2017 
  

February 9, 2017 
$0.45(25) 

November 9, 2016 
 0.44(26) 

September 5, 2016 
 0.20(27) 

August 9, 2016 
 0.43(28) 

April 27, 2016 
 0.41(29) 

  
$1.93 

  
   

Tax Year Ended February 29, 2016 
   

February 29, 2016 
$0.40(30) 

November 30, 2015 
 0.36(31) 

August 31, 2015 
 0.33(32) 

June 5, 2015 
 1.00(33) 

May 29. 2015 
 0.27(34) 

  
$2.36 

Tax Year Ended February 28, 2015 
   

February 27, 2015 
$0.22(35) 

November 28, 2014 
 0.18(36) 

  
$0.40 

Tax Year Ended February 28. 2014 
   

December 27, 2013 
$2.65(37) 

  
$2.65 

Tax Year Ended February 28, 2013 
   

December 31, 2012 
$4.25(38) 

  
$4.25 

Tax Year Ended February 29, 2012 
   

December 30, 2011 
$3.00(39) 

  
$3.00 

Tax Year Ended February 28, 2011 
   

December 29, 2010 
$4.40(40) 

  
$4.40 

Tax Year Ended February 28, 2010 
   

December 31, 2009 
$18.25(41) 

  
$18.25 
 

 

  (1) Based on shareholder elections, the dividend consisted of approximately $7.1 million in cash and 45,818 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.11 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on March 17, 20, 21, 22, 23, 24, 27, 28, 29, and 30, 2023.        (2) Based on shareholder elections, the dividend consisted of approximately $6.8 million in cash and 53,615 newly issued shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $24.26 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on December 20, 21, 22, 23, 27, 28, 29 and 30 2022 and January 3 and 4, 2023.       (3) Based on shareholder elections, the dividend consisted of approximately $5.3 million in cash and 52,312 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.00 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on September 16, 19, 20, 21, 22, 23, 26, 27, 28 and 29, 2022.       (4) Based on shareholder elections, the dividend consisted of approximately $5.1 million in cash and 48,590 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.40 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on June 15, 16, 17, 21, 22, 23, 24, 27, 28 and 29, 2022.       (5) Based on shareholder elections, the dividend consisted of approximately $5.3 million in cash and 42,825 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $25.89 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on March 15, 16, 17, 18, 21, 22, 23, 24, 25 and 28, 2022. 



F-72
 

 
  (6) Based on shareholder elections, the dividend consisted of approximately $5.3 million in cash and 41,520 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $26.85 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on January 5, 6, 7, 10, 11, 12, 13, 14, 18 and 19, 2022.       (7) Based on shareholder elections, the dividend consisted of approximately $4.9 million in cash and 38,016 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $26.77 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on September 15, 16, 17, 20, 21, 22, 23, 24, 27 and 28, 2021.       (8) Based on shareholder elections, the dividend consisted of approximately $4.1 million in cash and 33,100 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $25.03 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on June 16, 17, 18, 21, 22, 23, 24, 25, 28 and 29, 2021.       (9) Based on shareholder elections, the dividend consisted of approximately $3.9 million in cash and 38,580 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.69 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on April 9,12, 13, 14, 15, 16, 19, 20, 21 and 22, 2021.       (10) Based on shareholder elections, the dividend consisted of approximately $3.8 million in cash and 41,388 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.75 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on January 28, 29 and February 1, 2, 3, 4, 5, 8, 9 and 10, 2021.       (11) Based on shareholder elections, the dividend consisted of approximately $3.8 million in cash and 45,706 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $17.63 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on October 28, 29, 30 and November 2, 3, 4, 5, 6, 9 and 10, 2020.       (12) Based on shareholder elections, the dividend consisted of approximately $3.7 million in cash and 47,098 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $16.45 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on July 30, 31 and August 3, 4, 5, 6, 7, 10, 11 and 12, 2020. 
 
  (13) Based on shareholder elections, the dividend consisted of approximately $5.4 million in cash and 35,682 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $25.44 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on January 24, 27, 28, 29, 30, 31 and February 3, 4, 5 and 6, 2020.       (14) Based on shareholder elections, the dividend consisted of approximately $4.5 million in cash and 34,575 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.34 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on September 13, 16, 17, 18, 19, 20, 23, 24, 25 and 26, 2019.       (15) Based on shareholder elections, the dividend consisted of approximately $3.6 million in cash and 31,545 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.65 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2019.
 



F-73
 

 
  (16) Based on shareholder elections, the dividend consisted of approximately $3.5 million in cash and 31,240 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.36 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on March 15, 18, 19, 20, 21, 22, 25, 26, 27 and 28, 2019.       (17) Based on shareholder elections, the dividend consisted of approximately $3.4 million in cash and 30,796 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $18.88 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on December 18, 19, 20, 21, 24, 26, 27, 28, 31, 2018 and January 2, 2019.       (18) Based on shareholder elections, the dividend consisted of approximately $3.3 million in cash and 25,862 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.35 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on September 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2018.       (19) Based on shareholder elections, the dividend consisted of approximately $2.7 million in cash and 21,562 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.72 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2018.       (20) Based on shareholder elections, the dividend consisted of approximately $2.6 million in cash and 25,354 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $19.91 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on March 13, 14, 15, 16, 19, 20, 21, 22, 23 and 26, 2018.       (21) Based on shareholder elections, the dividend consisted of approximately $2.5 million in cash and 25,435 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.14 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on December 13, 14, 15, 18, 19, 20, 21, 22, 26 and 27, 2017.       (22) Based on shareholder elections, the dividend consisted of approximately $2.2 million in cash and 33,551 newly issued shares of common stock, or 0.6% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $20.19 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on September 13, 14, 15, 18, 19, 20, 21, 22, 25 and 26, 2017.       (23) Based on shareholder elections, the dividend consisted of approximately $2.3 million in cash and 26,222 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $20.04 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 15, 16, 19, 20, 21, 22, 23, 26 and 27, 2017. 
 
  (24) Based on shareholder elections, the dividend consisted of approximately $2.0 million in cash and 29,096 newly issued shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.38 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on March 15, 16, 17, 20, 21, 22, 23, 24, 27 and 28, 2017.       (25) Based on shareholder elections, the dividend consisted of approximately $1.6 million in cash and 50,453 newly issued shares of common stock, or 0.9% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $20.25 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on January 27, 30, 31 and February 1, 2, 3, 6, 7, 8 and 9, 2017.
 



F-74
 

 
  (26) Based on shareholder elections, the dividend consisted of approximately $1.5 million in cash and 58,548 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $17.12 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on October 27, 28, 31 and November 1, 2, 3, 4, 7, 8 and 9, 2016.       (27) Based on shareholder elections, the dividend consisted of approximately $0.7 million in cash and 24,786 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $17.06 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on August 22, 23, 24, 25, 26, 29, 30, 31 and September 1 and 2, 2016.       (28) Based on shareholder elections, the dividend consisted of approximately $1.5 million in cash and 58,167 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $16.32 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on July 27, 28, 29 and August 1, 2, 3, 4, 5, 8 and 9, 2016.       (29) Based on shareholder elections, the dividend consisted of approximately $1.5 million in cash and 56,728 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.43 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on April 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2016.       (30) Based on shareholder elections, the dividend consisted of approximately $1.4 million in cash and 66,765 newly issued shares of common stock, or 1.2% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.11 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on February 16, 17, 18, 19, 22, 23, 24, 25, 26 and 29, 2016.       (31) Based on shareholder elections, the dividend consisted of approximately $1.1 million in cash and 61,029 newly issued shares of common stock, or 1.1% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $14.53 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on November 16, 17, 18, 19, 20, 23, 24, 25, 27 and 30, 2015.       (32) Based on shareholder elections, the dividend consisted of approximately $1.1 million in cash and 47,861 newly issued shares of common stock, or 0.9% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.28 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on August 18, 19, 20, 21, 24, 25, 26, 27, 28 and 31, 2015.       (33) Based on shareholder elections, the dividend consisted of approximately $3.4 million in cash and 126,230 newly issued shares of common stock, or 2.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $16.47 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on May 22, 26, 27, 28, 29 and June 1, 2, 3, 4, and 5, 2015.       (34) Based on shareholder elections, the dividend consisted of approximately $0.9 million in cash and 33,766 newly issued shares of common stock, or 0.6% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $16.78 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on May 15, 18, 19, 20, 21, 22, 26, 27, 28 and 29, 2015. 
 
  (35) Based on shareholder elections, the dividend consisted of approximately $0.8 million in cash and 26,858 newly issued shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $14.97 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on February 13, 17, 18, 19, 20, 23, 24, 25, 26 and 27, 2015.
 



F-75
 

 
  (36) Based on shareholder elections, the dividend consisted of approximately $0.6 million in cash and 22,283 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $14.37 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on November 14, 17, 18, 19, 20, 21, 24, 25, 26 and 28, 2014.       (37) Based on shareholder elections, the dividend consisted of approximately $2.5 million in cash and 649,500 shares of common stock, or 13.7% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.439 per share, which equaled the volume weighted average trading price per share of the common stock on December 11, 13 and 16, 2013.       (38) Based on shareholder elections, the dividend consisted of $3.3 million in cash and 853,455 shares of common stock, or 22.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.444 per share, which equaled the volume weighted average trading price per share of the common stock on December 14, 17 and 19, 2012.       (39) Based on shareholder elections, the dividend consisted of $2.0 million in cash and 599,584 shares of common stock, or 18.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.117067 per share, which equaled the volume weighted average trading price per share of the common stock on December 20, 21 and 22, 2011.       (40) Based on shareholder elections, the dividend consisted of $1.2 million in cash and 596,235 shares of common stock, or 22.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 10.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $17.8049 per share, which equaled the volume weighted average trading price per share of the common stock on December 20, 21 and 22, 2010.       (41) Based on shareholder elections, the dividend consisted of $2.1 million in cash and 864,872 shares of common stock, or 104.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 13.7% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $1.5099 per share, which equaled the volume weighted average trading price per share of the common stock on December 24 and 28, 2009.       (42)  Based on shareholder elections, the dividend consisted of approximately $7.6 million in cash and 29,627 newly issued shares of common stock, or 0.2% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $25.29 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on June 15, 16, 20, 21, 22, 23, 26, 27, 28, and 29, 2023.       (43)  Based on shareholder elections, the dividend consisted of approximately $8.4 million in cash and 35,196 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $24.41 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on September 15, 18, 19, 20, 21, 22, 25, 26, 27, and 28, 2023.       (44)  Based on shareholder elections, the dividend consisted of approximately $8.9 million in cash and 37,394 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $24.47 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on December 14, 15, 18, 19, 20, 21, 22, 26, 27, and 28, 2023.       (45)  Based on shareholder elections, the dividend consisted of approximately
$9.0 million in cash and 45,490 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend
payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.85 per share, which
equaled 95% of the volume weighted average trading price per share of the common stock on March 15, 18, 19, 20, 21, 22, 25, 26, 27, and
28, 2024.  



F-76
 

 
The following tables summarize dividends declared for the years ended February 29, 2024, February 28, 2023, February 28, 2022, February 28, 2021 and February 29, 2020 (dollars in thousands except for share amounts):
 


Date Declared 
Record Date 
Payment Date 
Amount per Share  
Total Amount* 

February 15, 2024 
March 13, 2024 
March 28, 2024 
$0.73  
$9,967 

November 15, 2023 
December 11, 2023 
December 28, 2023 
 0.72  
 9,803 

August 14, 2023 
September 14, 2023 
September 28, 2023 
 0.71  
 9,287 

May 22, 2023 
June 13, 2023 
June 29, 2023 
 0.70  
 8,352 

Total dividends declared 
  
  
$2.86  
$37,409 

 


Date Declared 
Record Date 
Payment Date 
Amount per Share  
Total Amount* 

February 28, 2023 
March 14, 2023 
March 28, 2023 
$0.69  
$8,193 

November 15, 2022 
December 15, 2022 
January 4, 2023 
 0.68  
 8,081 

August 29, 2022 
September 14, 2022 
September 29, 2022 
 0.54  
 6,433 

May 26, 2022 
June 14, 2022 
June 29, 2022 
 0.53  
 6,370 

Total dividends declared 
  
  
$2.44  
$29,077 

 


Date Declared 
Record Date 
Payment Date 
Amount per Share  
Total Amount* 

February 24, 2022 
March 14, 2022 
March 28, 2022 
$0.53  
$6,434 

August 26, 2021 
September 14, 2021 
September 28, 2021 
 0.52  
 5,889 

May 27, 2021 
June 15, 2021 
June 29, 2021 
 0.44  
 4,910 

March 22, 2021 
April 8, 2021 
April 22, 2021 
 0.43  
 4,799 

Total dividends declared 
  
  
$1.92  
$22,032 

 


Date Declared 
Record Date 
Payment Date 
Amount per Share  
Total Amount* 

January 5, 2021 
January 26, 2021 
February 10, 2021 
$0.42  
$4,679 

October 7, 2020 
October 26, 2020 
November 10, 2020 
 0.41  
 4,581 

July 7, 2020 
July 27, 2020 
August 12, 2020 
 0.40  
 4,487 

Total dividends declared 
  
  
$1.23  
$13,747 

 


Date Declared 
Record Date 
Payment Date 
Amount per Share  
Total Amount* 

January 7, 2020 
January 24, 2020 
February 6, 2020 
$0.56  
$6,262 

August 27, 2019 
September 13, 2019 
September 26, 2019 
 0.56  
 5,323 

May 28, 2019 
June 13, 2019 
June 27, 2019 
 0.55  
 4,336 

February 26, 2019 
March 14, 2019 
March 28, 2019 
 0.54  
 4,176 

Total dividends declared 
  
  
$2.21  
$20,097 
 


 


*Total amount is calculated based on the number of shares outstanding
at the date of record.

 


F-77
 

 
Note 14. Financial Highlights 
 
The following is a schedule of financial highlights as of and for the years ended February 29, 2024, February 28, 2023, February 28, 2022, February 28, 2021 and February 29, 2020:                         
 


Per share data 
February 29, 
2024  
February 28, 
2023  
February 28, 
2022  
February 28, 
2021  
February 29, 
2020 

Net asset value at beginning of period 
$29.18  
$29.33  
$27.25  
$27.13  
$23.62 

Net investment income(1) 
 4.49  
 2.94  
 1.74  
 2.07  
 1.59 

Net realized and unrealized gain and losses on investments(1) 
 (3.77) 
 (0.75) 
 2.46  
 (0.74) 
 4.56 

Realized losses on extinguishment of debt* 
 (0.01) 
 (0.13) 
 (0.21) 
 (0.01) 
 (0.17)

Net increase in net assets resulting from operations 
 0.71  
 2.06  
 3.99  
 1.32  
 5.98 

Distributions declared from net investment income 
 (2.82) 
 (2.28) 
 (1.93) 
 (1.23) 
 (2.21)

Total distributions to stockholders 
 (2.82) 
 (2.28) 
 (1.93) 
 (1.23) 
 (2.21)

Issuance of common stock above net asset value(2) 
 (0.40) 
 (2.28) 
 (1.93) 
 (1.23) 
 (2.21)

Capital contribution from Manager for the issuance of common stock(8) 
 0.48  
 -  
 -  
 -  
 - 

Repurchases of common stock(3) 
 0.03  
 0.17  
 0.01  
 0.13  
 - 

Dilution(4) 
 (0.06) 
 (0.10) 
 -  
 (0.10) 
 (0.26)

Net asset value at end of period 
$27.12  
$29.18  
$29.33  
$27.25  
$27.13 

Net assets at end of period 
$370,224,108  
$346,958,042  
$355,780,523  
$304,185,770  
$304,286,853 

Shares outstanding at end of period 
 13,653,476  
 11,890,500  
 12,131,350  
 11,161,416  
 11,217,545 

Per share market value at end of period 
$23.61  
$27.55  
$27.47  
$23.08  
$22.91 

Total return based on market value(5) 
 -3.92% 
 10.35% 
 28.19% 
 7.63% 
 9.28%

Total return based on net asset value(6) 
 4.20% 
 9.46% 
 15.88% 
 7.31% 
 26.22%

Ratio/Supplemental data: 
    
    
    
    
   

Ratio of net investment income to average net assets 
 16.01% 
 10.23% 
 6.05% 
 7.77% 
 6.31%

Ratio of loss on extinguishment of debt to average net assets 
 0.03% 
 0.46% 
 0.74% 
 0.04% 
 0.67%

Expenses: 
    
    
    
    
   

Ratios of operating expenses and income taxes to average net assets* 
 8.59% 
 7.71% 
 6.48% 
 6.90% 
 6.10%

Ratio of incentive management fees to average net assets 
 2.26% 
 1.47% 
 3.58% 
 1.65% 
 6.01%

Ratio of interest and debt financing expenses to average net assets 
 13.84% 
 9.73% 
 6.03% 
 4.56% 
 6.23%

Ratio of total expenses and income taxes to average net assets* 
 24.70% 
 18.91% 
 16.09% 
 13.11% 
 18.34%

Portfolio turnover rate(7) 
 2.80% 
 24.05% 
 33.59% 
 25.26% 
 36.82%

Asset coverage ratio per unit(8) 
 1,610  
 1,659  
 2,092  
 3,471  
 6,071 

Average market value per unit 
    
    
    
    
   

Revolving Credit Facility(9) 
 N/A  
 N/A  
 N/A  
 N/A  
 N/A 

SBA Debentures Payable(9) 
 N/A  
 N/A  
 N/A  
 N/A  
 N/A 

6.75% Notes Payable 2023(10) 
 N/A  
 N/A  
 N/A  
 N/A  
 N/A 

8.75% Notes Payable 2025(9) 
 N/A  
 N/A  
 N/A  
 N/A  
 N/A 

6.25% Notes Payable 2025(11) 
 N/A  
 N/A  
 N/A  
$24.24  
$25.75 

7.00% Notes Payable 2025(9) 
 N/A  
 N/A  
 N/A  
 N/A  
 N/A 

7.25% Notes Payable 2025(12) 
 N/A  
 N/A  
$26.18  
 25.77  
 N/A 

7.75% Notes Payable 2025(9) 
 N/A  
 N/A  
 N/A  
 N/A  
 N/A 

4.375% Notes Payable 2026(9) 
 N/A  
 N/A  
 N/A  
 N/A  
 N/A 

4.35% Notes Payable 2027(9) 
 N/A  
 N/A  
 N/A  
 N/A  
 N/A 

6.00% Notes Payable 2027 
$23.51  
$23.97  
 N/A  
 N/A  
 N/A 

6.25% Notes Payable 2027(9) 
 N/A  
 N/A  
 N/A  
 N/A  
 N/A 

8.00% Notes Payable 2027 
$25.00  
$25.08  
 N/A  
 N/A  
 N/A 

8.125% Notes Payable 2027 
$25.05  
$25.10  
 N/A  
 N/A  
 N/A 

8.50% Notes Payable 2028 
$25.17  
 N/A  
 N/A  
 N/A  
 N/A 
 

 

  * Certain prior period amounts have been reclassified to conform to current period presentation.       (1) Per share amounts are calculated using the weighted average shares outstanding during the period.
 



F-78
 

 

 (2) The continuous issuance of common stock may cause an incremental increase in NAV per share due to the sale of shares at the then prevailing public offering price and the receipt of net proceeds per share by the Company in excess of NAV per share on each subscription closing date. The per share data was derived by computing (i) the sum of (A) the number of shares issued in connection with subscriptions and/or distribution reinvestment on each share transaction date multiplied by (B) the differences between the net proceeds per share and the NAV per share on each share transaction date, divided by (ii) the total shares outstanding during the period.

 
  (3) Represents the anti-dilutive impact on the NAV of the Company due to the repurchase of common shares.        (4) Represents the dilutive effect of issuing common stock below NAV per share during the period in connection with the satisfaction of the Company’s annual RIC distribution requirement and may include the impact of the different share amounts used for different items (weighted average basic common shares outstanding for the corresponding year and actual common shares outstanding at the end of the year) in the per common share data calculation and rounding impacts. See Note 13, Dividend.                    (5) Total investment return is calculated assuming a purchase of common shares at the current market value on the first day and a sale at the current market value on the last day of the periods reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the DRIP. Total investment return does not reflect brokerage commissions.       (6) Total investment return is calculated assuming a purchase of common shares at the current NAV on the first day and a sale at the current NAV on the last day of the periods reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the DRIP. Total investment return does not reflect brokerage commissions.       (7) Portfolio turnover rate is calculated using the lesser of year-to-date sales or year-to-date purchases over the average of the invested assets at fair value.        (8) Asset coverage ratio per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage ratio per unit is expressed in terms of dollar amounts per $1,000 of indebtedness. Asset coverage ratio per unit does not include unfunded commitments. The inclusion of unfunded commitments in the calculation of the asset coverage ratio per unit would not cause us to be below the required amount of regulatory coverage.       (9) The Revolving Credit Facility, SBA Debentures, 8.75 Notes Payable 2025, 7.75% Notes Payable 2025, 4.375% Notes Payable 2026, 4.35% Notes Payable 2026, 7.00% Notes Payable 2025 and 6.25% Notes Payable 2027 are not registered for public trading.       (10) On December 21, 2019 and February 7, 2020, the Company redeemed $50.0 million and $24.5 million, respectively, in aggregate principal amount of the $74.5 million in aggregate principal amount of issued and outstanding 2023 Notes and are no longer listed on the NYSE.       (11) On August 31, 2021, the Company redeemed $60.0 million in aggregate principal amount of the issued and outstanding 6.25% 2025 Notes and, as a result of the full redemption, the 6.25% 2025 Notes are no longer listed on the NYSE.       (12) On July 14, 2022, the Company redeemed $43.1 million in aggregate principal amount of the $43.1 million in aggregate principal amount of issued and outstanding 7.25% 2025 Notes and are no longer listed on the NYSE. 

 


F-79
 

 
Note 15. Selected Quarterly Data (Unaudited) 
 


  
2024 

($ in thousands, except per share numbers) 
Qtr 4  
Qtr 3  
Qtr 2  
Qtr 1 

Total investment income 
$37,233  
$36,340  
$35,514  
$34,632 

Net investment income 
$12,785  
$14,166  
$13,965  
$15,959 

Net realized and unrealized gain (loss) 
$(7,478) 
$(18,222) 
$(5,959) 
$(16,172)

Realized losses on extinguishment of debt* 
$-  
$-  
$(110) 
$- 

Net increase in net assets resulting from operations 
$5,307  
$(4,056) 
$7,896  
$(213)

Net investment income per common share 
$0.94  
$1.09  
$1.15  
$1.35 

Net realized and unrealized gain (loss) per common share 
$(0.55) 
$(1.40) 
$(0.49) 
$(1.36)

Dividends declared per common share 
$0.72  
$0.71  
$0.70  
$0.69 

Net asset value per common share 
$27.12  
$27.42  
$28.44  
$28.48 

 


  
2023 

($ in thousands, except per share numbers) 
Qtr 4  
Qtr 3  
Qtr 2  
Qtr 1 

Total investment income 
$32,315  
$26,257  
$21,853  
$18,679 

Net investment income 
$9,650  
$9,877  
$7,698  
$7,976 

Net realized and unrealized gain (loss) 
$9,934  
$(3,863) 
$(5,545) 
$(9,464)

Realized losses on extinguishment of debt* 
$(382) 
$-  
$(1,205) 
$- 

Net increase in net assets resulting from operations 
$19,202  
$6,014  
$948  
$(1,488)

Net investment income per common share 
$0.81  
$0.83  
$0.64  
$0.66 

Net realized and unrealized gain (loss) per common share 
$0.81  
$(0.32) 
$(0.46) 
$(0.78)

Dividends declared per common share 
$0.68  
$0.54  
$0.53  
$0.53 

Net asset value per common share 
$29.18  
$28.25  
$28.27  
$28.69 

 


  
2022 

($ in thousands, except per share numbers) 
Qtr 4  
Qtr 3  
Qtr 2  
Qtr 1 

Total investment income 
$18,980  
$16,502  
$18,442  
$16,816 

Net investment income 
$5,796  
$5,197  
$6,393  
$2,556 

Net realized and unrealized gain (loss) 
$2,725  
$3,908  
$3,101  
$18,493 

Realized losses on extinguishment of debt* 
$(2,434) 
$(118) 
$(1,552) 
$- 

Net increase in net assets resulting from operations 
$8,404  
$8,340  
$7,942  
$21,049 

Net investment income per common share 
$0.48  
$0.45  
$0.57  
$0.23 

Net realized and unrealized gain (loss) per common share 
$0.23  
$0.34  
$0.29  
$1.66 

Dividends declared per common share 
$0.53  
$0.52  
$0.44  
$0.43 

Net asset value per common share 
$29.33  
$29.17  
$28.97  
$28.70 
 

 


*Certain prior period amounts have been reclassified to conform
to current period presentation.

 


F-80
 

 
Note 16. Subsequent Events 
 
The Company has evaluated subsequent events through
the filing of this Form 10-K and determined that there have been no events that have occurred that would require adjustments to the Company’s
consolidated financial statements and disclosures in the consolidated financial statements except for the following:
 
Live Oak Facility
 
On March 27, 2024, the Company and its wholly
owned special purpose subsidiary, Saratoga Investment Funding III LLC (“SIF III”), entered into a credit and security agreement
(the “Live Oak Credit Agreement”), by and among SIF III, as borrower, the Company, as collateral manager and equityholder,
the lenders from time to time parties thereto, Live Oak Banking Company (“Live Oak”), as administrative agent and collateral
agent, U.S. Bank National Association, as custodian, and U.S. Bank Trust Company, National Association, as collateral administrator, relating
to a special purpose vehicle financing credit facility (the “Live Oak Credit Facility”).
 
The Live Oak Credit Facility provides for borrowings
in U.S. dollars in an aggregate amount of up to $50.0 million. During the first two years following the closing date, SIF III may request
one or more increases in the commitment amount from $50.0 million to an amount not to exceed $150.0 million, subject to certain terms
and conditions and a customary fee. The terms of the Live Oak Credit Agreement require a minimum drawn amount of $12.5 million at all
times during the period ending March 27, 2025 and, thereafter, the greater of: (i) $25.0 million and (ii) 50% of the facility amount in
effect at such time. The Live Oak Credit Facility matures on March 27, 2027. Advances are available during the term of the Live Oak Credit
Facility and must be repaid in full at maturity. SIF III may request an extension of the maturity date by an additional one year, subject
to the agreement of the lenders and an extension fee.
 
Advances under the Live Oak Credit Facility are
subject to a borrowing base calculation, and the Live Oak Credit Facility has various eligibility criteria for loans to be included in
the borrowing base. Advances under the Live Oak Credit Facility bear interest at a floating rate per annum equal to Adjusted Term SOFR
plus an applicable margin between 3.50% and 4.25% based on the Live Oak Credit Facility’s utilization. The Live Oak Credit Agreement
also provides for an unused fee of 0.50% on the unused commitments. SIF III’s obligations to the lenders under the Live Oak Credit
Facility are secured by a first priority security interest in substantially all of SIF III’s assets. In addition, SIF III’s
obligations to the lenders under the Live Oak Credit Facility are secured by a pledge by the Company of its equity interests in SIF III,
which is evidenced by the equity pledge agreement, dated as of March 27, 2024, by and between the Company, as pledgor, and Live Oak, as
collateral agent for the benefit of the secured parties.
 
In connection with the Live Oak Credit Agreement,
the Company entered into a loan sale and contribution agreement with SIF III, dated as of March 27, 2024, by and between the Company,
as seller, and SIF III, as purchaser, pursuant to which the Company will sell or contribute certain loans held by the Company to SIF III
to be used to support the borrowing base under the Live Oak Credit Facility. The Live Oak Credit Facility permits loan proceeds and excess
cash in SIF III’s collection accounts to be distributed to us at any time based on three business days advance notice, subject to
compliance with various conditions, including the absence of a default or event of default, the absence of an over-advance against the
borrowing base and the absence of a violation of the financial covenants.
 


F-81
 

 
INDEX TO OTHER FINANCIAL STATEMENTS
Saratoga Investment Corp. CLO 2013-1, Ltd.
 


 
PAGE

Independent
    Auditor’s Report
S-2

Statements
    of Assets and Liabilities as of February 29, 2024 and February 28, 2023
S-3

Statements
    of Operations for the years ended February 29, 2024, February 28, 2023 and February 28, 2022
S-4

Statements
    of Changes in Net Assets for the years ended February 29, 2024, February 28, 2023 and February 28, 2022
S-5

Statements
    of Cash Flows for the years ended February 29, 2024, February 28, 2023 and February 28, 2022
S-6

Schedules
    of Investments as of February 29, 2024 and February 28, 2023
S-7

Notes
    to Financial Statements
S-42

 
IMPORTANT NOTE
 
In accordance with certain SEC rules, Saratoga
Investment Corp. (the “Company”) is providing additional information regarding one of its portfolio companies, Saratoga Investment
Corp. CLO 2013-1, Ltd. (“Saratoga CLO”). The Company owns 100% of the subordinated notes of Saratoga CLO. The additional financial
information regarding Saratoga CLO does not directly impact the Company’s financial position, results of operations or cash flows.
 


S-1
 

 

 
Independent Auditor’s Report
 
To the Board of Directors
Saratoga Investment Corp. CLO 2013-1, Ltd.
 
Opinion
 
We have audited the financial statements of Saratoga
Investment Corp. CLO 2013-1, Ltd. (“Saratoga CLO”), which comprise the statements of assets and liabilities as of February
29, 2024 and February 28, 2023, including the schedule of investments, as of February 29, 2024 and February 28, 2023, and the related
statements of operations, changes in net assets, and cash flows for the years ended February 29, 2024, February 28, 2023, and February
28, 2022, and the related notes to the financial statements.
 
In our opinion, the accompanying financial statements
present fairly, in all material respects, the financial position of Saratoga Investment Corp. CLO 2013-1, Ltd. as of February 29, 2024
and February 28, 2023, and the results of its operations, changes in its net assets, and its cash flows for the years ended February 29,
2024, February 28, 2023, and February 28, 2022, in accordance with accounting principles generally accepted in the United States of America.
 
Basis for Opinion
 
We conducted our audits in accordance with auditing
standards generally accepted in the United States of America ("GAAS"). Our responsibilities under those standards are further
described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent
of Saratoga CLO and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
 
Responsibilities of Management for the Financial Statements
 
Management is responsible for the preparation
and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of
America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error.
 
In preparing the financial statements, management
is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Saratoga
CLO's ability to continue as a going concern for one year after the date that the financial statements are available to be issued.
 
Auditor's Responsibilities for the Audit of the Financial Statements
 
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore
is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there
is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based
on the financial statements.
 
In performing an audit in accordance with GAAS,
we:
 

●Exercise
                                            professional judgment and maintain professional skepticism throughout the audit.
 

●Identify
                                            and assess the risks of material misstatement of the financial statements, whether due to
                                            fraud or error, and design and perform audit procedures responsive to those risks. Such procedures
                                            include examining, on a test basis, evidence regarding the amounts and disclosures in the
                                            financial statements.
 

●Obtain
                                            an understanding of internal control relevant to the audit in order to design audit procedures
                                            that are appropriate in the circumstances, but not for the purpose of expressing an opinion
                                            on the effectiveness of Saratoga CLO's internal control. Accordingly, no such opinion is
                                            expressed.
 

●Evaluate
                                            the appropriateness of accounting policies used and the reasonableness of significant accounting
                                            estimates made by management, as well as evaluate the overall presentation of the financial
                                            statements.
 

●Conclude
                                            whether, in our judgment, there are conditions or events, considered in the aggregate, that
                                            raise substantial doubt about Saratoga CLO's ability to continue as a going concern for a
                                            reasonable period of time.
 
We are required to communicate with those charged
with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal
control-related matters that we identified during the audit.
 
/s/ CohnReznick LLP
 
Parsippany, New Jersey
May 6, 2024
 


S-2
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd. 
Statements of Assets and Liabilities
 


  
February 29,
 2024  
February 28,
 2023 

  
   
  

ASSETS 
   
  

Investments at fair value 
   
  

Loans at fair value (amortized cost of $629,345,724 and $645,599,001, respectively) 
$606,531,189  
$605,954,468 

Equities at fair value  (amortized cost of $1,649,986 and $0, respectively) 
 1,020,585  
 - 

Total investments at fair value (amortized cost of $630,995,710 and $645,599,001, respectively) 
 607,551,774  
 605,954,468 

Cash and cash equivalents 
 12,104,832  
 23,776,950 

Receivable from open trades 
 2,865,174  
 1,827,460 

Interest receivable (net of reserve of $615,604 and $234,690, respectively) 
 3,402,471  
 3,026,720 

Due from affiliate (See Note 7) 
 3,953  
 119,150 

Prepaid expenses and other assets 
 205,400  
 152,760 

Total assets 
$626,133,604  
$634,857,508 

  
    
   

LIABILITIES 
    
   

Interest payable 
$5,043,712  
$4,662,695 

Payable from open trades 
 10,519,573  
 23,184,337 

Accrued base management fee 
 68,605  
 72,762 

Accrued subordinated management fee 
 274,418  
 291,047 

Accounts payable and accrued expenses 
 84,199  
 82,565 

Saratoga Investment Corp. CLO 2013-1, Ltd. Notes: 
    
   

Class A-1-R-3 Senior Secured Floating Rate Notes 
 357,500,000  
 357,500,000 

Class A-2-R-3 Senior Secured Floating Rate Notes 
 65,000,000  
 65,000,000 

Class B-FL-R-3 Senior Secured Floating Rate Notes 
 60,500,000  
 60,500,000 

Class B-FXD-R-3 Senior Secured Fixed Rate Notes 
 11,000,000  
 11,000,000 

Class C-FL-R-3 Deferrable Mezzanine Floating Rate Notes 
 26,000,000  
 26,000,000 

Class C-FXD-R-3 Deferrable Mezzanine Fixed Rate Notes 
 6,500,000  
 6,500,000 

Class D-R-3 Deferrable Mezzanine Floating Rate Notes 
 39,000,000  
 39,000,000 

Discount on Class D-R-3 Notes 
 (220,100) 
 (244,234)

Class E-R-3 Deferrable Mezzanine Floating Rate Notes 
 27,625,000  
 27,625,000 

Discount on Class E-R-3 Notes 
 (2,286,598) 
 (2,537,315)

Class F-1-R-3 Notes Deferrable Junior Floating Rate Notes 
 8,500,000  
 8,500,000 

Class F-2-R-3 Notes Deferrable Junior Floating Rate Notes 
 9,375,000  
 9,375,000 

Deferred debt financing costs 
 (1,707,224) 
 (1,897,076)

Subordinated Notes 
 111,000,000  
 111,000,000 

Discount on Subordinated Notes 
 (36,164,988) 
 (40,130,353)

Total liabilities 
 697,611,597  
 705,484,428 

  
    
   

Commitments and contingencies 
    
   

  
    
   

NET ASSETS 
    
   

Ordinary equity, par value $1.00, 250 ordinary shares authorized, 250 and 250 common shares issued and outstanding, respectively 
 250  
 250 

Total distributable earnings (loss) 
 (71,478,243) 
 (70,627,170)

Total net deficit 
 (71,477,993) 
 (70,626,920)

Total liabilities and net assets 
$626,133,604  
$634,857,508 

 
See accompanying notes to financial statements.
 


S-3
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Statements of Operations
 


  
For the years ended 

  
February 29, 
2024  
February 28, 
2023  
February 28, 
2022 

INVESTMENT INCOME 
   
   
  

Interest from investments 
$61,667,773  
$42,505,427  
$30,767,008 

Interest from cash and cash equivalents 
 719,268  
 39,754  
 691 

Other income 
 929,392  
 551,174  
 710,708 

Total investment income 
 63,316,433  
 43,096,355  
 31,478,407 

  
    
    
   

EXPENSES 
    
    
   

Interest and debt financing expenses 
 57,706,205  
 38,425,261  
 24,220,477 

Base management fee 
 654,046  
 653,964  
 652,517 

Subordinated management fee 
 2,616,185  
 2,615,856  
 2,610,073 

Professional fees 
 307,340  
 252,196  
 255,521 

Trustee expenses 
 262,197  
 276,689  
 262,632 

Other expense 
 241,181  
 303,371  
 243,511 

Total expenses 
 61,787,154  
 42,527,337  
 28,244,731 

NET INVESTMENT INCOME (LOSS) 
 1,529,279  
 569,018  
 3,233,676 

  
    
    
   

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 
    
    
   

Net realized loss from investments 
 (18,580,949) 
 (8,412,837) 
 (1,063,813)

Net change in unrealized appreciation (depreciation) on investments 
 16,200,597  
 (25,585,618) 
 (10,829,482)

Net realized and unrealized gain (loss) on investments 
 (2,380,352) 
 (33,998,455) 
 (11,893,295)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 
$(851,073) 
$(33,429,437) 
$(8,659,619)

 
See accompanying notes to financial statements.
 


S-4
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Statements of Changes in Net Assets
 


  
For the years ended 

  
February 29, 
2024  
February 28, 
2023  
February 28, 
2022 

INCREASE (DECREASE) FROM OPERATIONS: 
   
   
  

Net investment income (loss) 
$1,529,279  
$569,018  
$3,233,676 

Net realized gain (loss) from investments 
 (18,580,949) 
 (8,412,837) 
 (1,063,813)

Realized losses on extinguishment of debt 
 -  
 -  
 - 

Net change in unrealized appreciation (depreciation) on investments 
 16,200,597  
 (25,585,618) 
 (10,829,482)

Net increase (decrease) in net assets resulting from operations 
 (851,073) 
 (33,429,437) 
 (8,659,619)

Total increase (decrease) in net assets 
 (851,073) 
 (33,429,437) 
 (8,659,619)

Net assets at beginning of period 
 (70,626,920) 
 (37,197,483) 
 (28,537,864)

Net assets at end of period 
$(71,477,993) 
$(70,626,920) 
$(37,197,483)

 
See accompanying notes to financial statements.
 


S-5
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Statements of Cash Flows
 


  
For the years ended 

  
February 29, 2024  
February 28, 2023  
February 28, 2022 

Operating activities 
   
   
  

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 
$(851,073) 
$(33,429,437) 
$(8,659,618)

ADJUSTMENTS TO RECONCILE NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: 
    
    
   

Payment-in-kind and other adjustments to cost 
 (960,409) 
 (764,255) 
 (609,083)

Net accretion of discount on investments 
 (3,123,995) 
 (2,470,677) 
 (3,151,234)

Amortization of discount and deferred debt financing costs 
 4,430,068  
 4,418,481  
 4,418,481 

Realized loss on extinguishment of debt 
 -  
 -  
 - 

Net realized (gain) loss from investments 
 18,580,949  
 8,412,837  
 1,063,812 

Net change in unrealized (appreciation) depreciation on investments 
 (16,200,597) 
 25,585,618  
 10,829,482 

Proceeds from sales and repayments of investments 
 121,049,971  
 124,326,428  
 247,233,353 

Purchases of investments 
 (120,943,225) 
 (122,081,068) 
 (302,309,641)

(Increase) decrease in operating assets: 
    
    
   

Interest receivable, net 
 (375,751) 
 (963,864) 
 (565,523)

Receivable from open trades 
 (1,037,714) 
 7,325,200  
 (7,250,906)

Due from affiliate 
 115,197  
 (119,150) 
 - 

Prepaid expenses and other assets 
 (52,640) 
 (52,693) 
 18,801 

Increase (decrease) in operating liabilities: 
    
    
   

Interest and debt fees payable 
 381,017  
 3,002,919  
 1,535,543 

Payable for open trades 
 (12,664,764) 
 4,389,710  
 (47,503,941)

Accrued base management fee 
 (4,157) 
 252  
 65,580 

Accrued subordinated management fee 
 (16,629) 
 1,007  
 262,325 

Accounts payable and accrued expenses 
 1,634  
 23,849  
 (751,044)

Due to affiliate 
 -  
 -  
 (2,600,000)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 
 (11,672,118) 
 17,605,157  
 (107,973,613)

  
    
    
   

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 
 (11,672,118) 
 17,605,157  
 (107,973,613)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 
 23,776,950  
 6,171,793  
 114,145,406 

CASH AND CASH EQUIVALENTS, END OF YEAR 
$12,104,832  
$23,776,950  
$6,171,793 

  
    
    
   

Supplemental Information: 
    
    
   

Interest paid during the year 
$52,895,120  
$31,003,861  
$18,266,452 

  
    
    
   

Supplemental non-cash information: 
    
    
   

Paid-in-kind interest income and other adjustments to cost 
$960,409  
$764,255  
$609,083 

 Net accretion of discount on investments 
 3,123,995  
 2,470,677  
 3,151,234 

Amortization of deferred debt financing costs and discount on notes 
 4,430,068  
 4,418,481  
 4,418,481 

 
See accompanying notes to financial statements.
 


S-6
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 



Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

Altisource
    Solutions S.a r.l. 
Banking,
    Finance, Insurance & Real Estate 
Common
    Stock 
Equity 
  
    
    
  
 15,981  
$-  
$44,587 

Envision
    Parent Inc 
Healthcare
    & Pharmaceuticals 
Common
    Stock 
Equity 
  
    
    
  
 92,837  
 -  
 - 

Envision
    Parent Inc 
Healthcare
    & Pharmaceuticals 
Warrants 
Equity 
  
    
    
  
 4,410  
 175,000  
 42,998 

Isagenix
    International, LLC 
Beverage,
    Food & Tobacco 
Common
    Stock 
Equity 
  
    
    
  
 86,398  
 -  
 - 

Resolute
    Investment Managers (American Beacon), Inc. 
Banking,
    Finance, Insurance & Real Estate 
Common
    Stock 
Equity 
  
    
    
  
 24,320  
 1,034,581  
 468,000 

URS
    TOPCO LLC 
Transportation:
    Cargo 
Common
    Stock 
Equity 
  
    
    
  
 25,330  
 440,405  
 465,000 

1011778
    B.C Unltd Liability Co 
Beverage,
    Food & Tobacco 
Term
    Loan B (09/23) 
Loan 
1M USD SOFR+
    2.25 % 
 0.00% 
 7.58% 
9/12/2030 
$1,447,500  
 1,427,292  
 1,440,002 

19TH
    HOLDINGS GOLF, LLC 
Consumer
    goods: Durable 
Term
    Loan 
Loan 
1M USD SOFR+
    3.25 % 
 0.50% 
 8.67% 
2/7/2029 
 2,473,646  
 2,383,742  
 2,416,950 

888
    Acquisitions Limited 
Hotel,
    Gaming & Leisure 
Term
    Loan B 
Loan 
6M USD SOFR+
    5.25 % 
 0.00% 
 10.82% 
7/8/2028 
 2,472,826  
 2,173,473  
 2,418,745 

Adtalem
    Global Education Inc. 
Services:
    Business 
Term
    Loan B 
Loan 
1M USD SOFR+
    3.50 % 
 0.75% 
 8.83% 
8/12/2028 
 582,329  
 578,482  
 583,423 

Aegis
    Sciences Corporation 
Healthcare
    & Pharmaceuticals 
Term
    Loan 
Loan 
3M USD SOFR+
    5.50 % 
 1.00% 
 11.08% 
5/9/2025 
 2,308,370  
 2,303,734  
 2,206,410 

Agiliti
    Health Inc. 
Healthcare
    & Pharmaceuticals 
Term
    Loan B (03/23) 
Loan 
3M USD SOFR+
    3.00 % 
 0.00% 
 8.33% 
5/1/2030 
 1,674,704  
 1,662,945  
 1,668,424 

AHEAD
    DB Holdings, LLC 
Services:
    Business 
Term
    Loan (04/21) 
Loan 
3M USD SOFR+
    3.75 % 
 0.75% 
 9.20% 
10/18/2027 
 2,925,000  
 2,856,780  
 2,914,031 

Air
    Canada 
Transportation:
    Consumer 
Term
    Loan B (07/21) 
Loan 
1M USD SOFR+
    3.50 % 
 0.75% 
 8.93% 
8/11/2028 
 1,970,000  
 1,853,394  
 1,970,276 

AIS
    HoldCo, LLC 
Services:
    Business 
Term
    Loan 
Loan 
3M USD SOFR+
    5.00 % 
 0.00% 
 10.57% 
8/15/2025 
 4,551,925  
 4,499,117  
 4,392,607 

AIT
    Worldwide Logistics Holdings, Inc. 
Transportation:
    Cargo 
Term
    Loan (04/21) 
Loan 
1M USD SOFR+
    4.75 % 
 0.75% 
 10.17% 
4/6/2028 
 2,474,684  
 2,334,728  
 2,471,590 

Alchemy
    US Holdco 1, LLC 
Metals
    & Mining 
Term
    Loan 
Loan 
1M USD LIBOR+
    7.32 % 
 0.00% 
 7.42% 
10/10/2025 
 1,654,803  
 1,647,646  
 1,646,943 

AlixPartners,
    LLP 
Banking,
    Finance, Insurance & Real Estate 
Term
    Loan B (01/21) 
Loan 
1M USD SOFR+
    2.50 % 
 0.50% 
 7.94% 
2/4/2028 
 243,125  
 242,907  
 243,064 

Alkermes,
    Inc. 
Healthcare
    & Pharmaceuticals 
Term
    Loan B (3/21) 
Loan 
1M USD SOFR+
    2.50 % 
 0.50% 
 7.93% 
3/12/2026 
 2,104,577  
 2,095,205  
 2,101,947 

Allen
    Media, LLC 
Media:
    Diversified & Production 
Term
    Loan (7/21) 
Loan 
3M USD SOFR+
    5.50 % 
 0.00% 
 11.00% 
2/10/2027 
 4,349,069  
 4,329,175  
 3,803,870 

Alliant
    Holdings Intermediate, LLC 
Banking,
    Finance, Insurance & Real Estate 
Term
    Loan (12/23) 
Loan 
1M USD SOFR+
    3.50 % 
 0.50% 
 8.82% 
11/6/2030 
 803,044  
 802,787  
 803,197 

Allied
    Universal Holdco LLC 
Services:
    Business 
Term
    Loan 4/21 
Loan 
1M USD SOFR+
    3.75 % 
 0.50% 
 9.18% 
5/12/2028 
 1,955,000  
 1,948,856  
 1,945,948 

Alterra
    Mountain Company (Intrawest Resort Holdings) 
Hotel,
    Gaming & Leisure 
Term
    Loan B Add-on 
Loan 
1M USD SOFR+
    3.75 % 
 0.00% 
 9.07% 
5/31/2030 
 250,000  
 250,000  
 250,000 

 


S-7
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

Altisource Solutions S.a r.l.(c) 
Banking, Finance, Insurance & Real Estate 
Term Loan B (03/18) 
Loan 
3M USD SOFR+   5.00 % 
 1.00% 
 10.45% 
4/30/2025 
 1,110,821  
 1,110,656  
 877,549 

Altium Packaging LLC 
Containers, Packaging & Glass 
Term Loan (01/21) 
Loan 
1M USD SOFR+   2.75 % 
 0.50% 
 8.19% 
1/29/2028 
 486,250  
 484,910  
 483,819 

Amer Sports Oyj (MASCOT BIDCO OY) 
Consumer goods: Durable 
USD Term Loan B (01/24) 
Loan 
3M USD SOFR+   3.25 % 
 0.00% 
 8.58% 
2/7/2031 
 500,000  
 497,525  
 499,375 

American Axle & Manufacturing Inc. 
Automotive 
Term Loan (12/22) 
Loan 
1M USD SOFR+   3.50 % 
 0.50% 
 8.92% 
12/13/2029 
 480,000  
 467,515  
 479,798 

American Greetings Corporation 
Media: Advertising, Printing & Publishing 
Term Loan (01/23) 
Loan 
1M USD SOFR+   6.00 % 
 1.00% 
 11.33% 
4/5/2028 
 2,982,733  
 2,981,076  
 2,983,478 

American Trailer World Corp 
Automotive 
Term Loan 
Loan 
1M USD SOFR+   3.75 % 
 0.75% 
 9.18% 
3/3/2028 
 1,357,439  
 1,355,695  
 1,323,788 

AmWINS Group, LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan 2/21 
Loan 
1M USD SOFR+   2.25 % 
 0.75% 
 7.69% 
2/17/2028 
 1,940,029  
 1,924,089  
 1,930,484 

Anastasia Parent LLC 
Consumer goods: Non-durable 
Term Loan 
Loan 
3M USD SOFR+   3.75 % 
 0.00% 
 9.36% 
8/11/2025 
 947,500  
 946,257  
 681,859 

Anchor Packaging, LLC 
Containers, Packaging & Glass 
Term Loan B 
Loan 
1M USD SOFR+   3.50 % 
 0.00% 
 8.93% 
7/18/2026 
 1,959,296  
 1,939,016  
 1,955,632 

ANI Pharmaceuticals, Inc. 
Healthcare & Pharmaceuticals 
Term Loan B 
Loan 
1M USD SOFR+   6.00 % 
 0.75% 
 11.44% 
11/19/2027 
 2,940,000  
 2,901,304  
 2,940,000 

AP Core Holdings II LLC 
High Tech Industries 
Term Loan B1 
Loan 
1M USD SOFR+   5.50 % 
 0.75% 
 10.94% 
9/1/2027 
 1,775,000  
 1,757,513  
 1,734,317 

AP Core Holdings II LLC 
High Tech Industries 
Term Loan B2 
Loan 
1M USD SOFR+   5.50 % 
 0.75% 
 10.94% 
9/1/2027 
 500,000  
 495,081  
 487,320 

APEX GROUP TREASURY LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan 
Loan 
3M USD SOFR+   5.00 % 
 0.50% 
 10.32% 
7/26/2028 
 495,000  
 468,246  
 494,381 

Apollo Commercial Real Estate Finance, Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan B 
Loan 
1M USD SOFR+   2.75 % 
 0.00% 
 8.19% 
5/15/2026 
 2,908,629  
 2,890,508  
 2,857,728 

Apollo Commercial Real Estate Finance, Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan B1 (2/21) 
Loan 
1M USD SOFR+   3.50 % 
 0.50% 
 8.94% 
3/6/2028 
 972,500  
 966,275  
 943,325 

AppLovin Corporation 
High Tech Industries 
Term Loan (10/21) 
Loan 
1M USD SOFR+   3.00 % 
 0.50% 
 8.43% 
10/21/2028 
 1,473,750  
 1,471,272  
 1,474,207 

AppLovin Corporation 
High Tech Industries 
Term Loan (08/23) 
Loan 
1M USD SOFR+   3.00 % 
 0.50% 
 8.43% 
8/15/2030 
 969,617  
 969,617  
 970,374 

AqGen Ascensus, Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan 
Loan 
1M USD SOFR+   3.50 % 
 0.50% 
 8.94% 
8/2/2028 
 500,000  
 496,312  
 496,375 

Aramark Services, Inc. 
Services: Consumer 
Term Loan B (4/21) 
Loan 
1M USD SOFR+   2.50 % 
 0.00% 
 7.94% 
4/1/2028 
 1,753,715  
 1,748,558  
 1,750,436 

Aramark Services, Inc. 
Services: Consumer 
Term Loan 
Loan 
1M USD SOFR+   1.75 % 
 0.00% 
 7.19% 
1/15/2027 
 2,331,250  
 2,292,785  
 2,324,699 

 


S-8
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

ARC FALCON I INC. 
Chemicals, Plastics, & Rubber 
Term Loan 
Loan 
1M USD SOFR+ 3.50 % 
 0.50% 
 8.93% 
9/23/2028 
 981,274  
 978,810  
 972,550 

Arches Buyer Inc. 
Services: Consumer 
Term Loan B 
Loan 
1M USD SOFR+ 3.25 % 
 0.50% 
 8.68% 
12/6/2027 
 1,469,697  
 1,463,299  
 1,405,398 

ARCIS GOLF LLC 
Services: Consumer 
Term Loan B 
Loan 
1M USD SOFR+ 3.75 % 
 0.50% 
 9.19% 
11/24/2028 
 497,980  
 493,335  
 498,602 

Aretec Group, Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan B 
Loan 
1M USD SOFR+ 4.50 % 
 0.00% 
 9.93% 
8/9/2030 
 2,642,718  
 2,627,451  
 2,651,650 

Aspire Bakeries Holdings, LLC 
Beverage, Food & Tobacco 
Term loan 
Loan 
1M USD SOFR+ 4.25 % 
 0.00% 
 9.57% 
12/13/2030 
 900,000  
 891,160  
 900,000 

Asplundh Tree Expert, LLC 
Services: Business 
Term Loan 2/21 
Loan 
1M USD SOFR+ 1.75 % 
 0.00% 
 7.18% 
9/7/2027 
 967,500  
 965,030  
 966,068 

AssuredPartners Capital, Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan B (2/20) 
Loan 
1M USD SOFR+ 3.50 % 
 0.00% 
 8.94% 
2/12/2027 
 979,592  
 977,377  
 979,866 

Assuredpartners Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan 
Loan 
1M USD SOFR+ 3.50 % 
 0.50% 
 8.83% 
2/12/2027 
 491,250  
 490,654  
 491,250 

Assuredpartners Inc. 
Banking, Finance, Insurance & Real Estate 
Incremental Term Loan (7/21) 
Loan 
1M USD SOFR+ 3.50 % 
 0.50% 
 8.94% 
2/12/2027 
 975,000  
 975,000  
 975,000 

Asurion, LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan B10 
Loan 
1M USD SOFR+ 4.00 % 
 0.00% 
 9.43% 
8/19/2028 
 1,975,000  
 1,895,414  
 1,957,719 

Asurion, LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan B8 
Loan 
1M USD SOFR+ 3.25 % 
 0.00% 
 8.69% 
12/18/2026 
 2,934,604  
 2,928,879  
 2,915,442 

ATHENAHEALTH GROUP INC. 
Healthcare & Pharmaceuticals 
Term Loan B (2/22) 
Loan 
1M USD SOFR+ 3.25 % 
 0.50% 
 8.58% 
2/15/2029 
 1,317,171  
 1,313,077  
 1,304,619 

Avolon TLB Borrower 1 (US) LLC 
Capital Equipment 
Term Loan B6 
Loan 
1M USD SOFR+ 2.00 % 
 0.00% 
 7.32% 
6/22/2028 
 1,483,750  
 1,429,872  
 1,483,038 

Axalta Coating Systems US Holdings 
Chemicals, Plastics, & Rubber 
Term Loan B (08/23) 
Loan 
3M USD SOFR+ 2.50 % 
 0.50% 
 7.85% 
12/20/2029 
 867,888  
 860,595  
 868,183 

AZURITY PHARMACEUTICALS, INC. 
Healthcare & Pharmaceuticals 
Term Loan B 
Loan 
1M USD SOFR+ 6.62 % 
 0.75% 
 12.06% 
9/20/2027 
 450,000  
 440,909  
 445,500 

B&G Foods, Inc. 
Beverage, Food & Tobacco 
Term Loan 
Loan 
1M USD SOFR+ 2.50 % 
 0.00% 
 7.83% 
10/10/2026 
 556,042  
 553,804  
 553,540 

BAKELITE UK INTERMEDIATE LTD. 
Chemicals, Plastics, & Rubber 
Term Loan 
Loan 
3M USD SOFR+ 4.00 % 
 0.50% 
 9.50% 
5/29/2029 
 985,000  
 981,238  
 980,075 

Baldwin Risk Partners, LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan 
Loan 
1M USD SOFR+ 3.50 % 
 0.50% 
 8.94% 
10/14/2027 
 1,960,048  
 1,946,212  
 1,946,171 

  


S-9
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

Barnes Group Inc. 
Aerospace & Defense 
Term Loan B 
Loan 
1M USD SOFR+   3.00 % 
 0.00% 
 8.43% 
8/9/2030 
 249,375  
 247,649  
 249,500 

Bausch Health Companies Inc. 
Healthcare & Pharmaceuticals 
Term Loan B (1/22) 
Loan 
1M USD SOFR+   5.25 % 
 0.50% 
 10.67% 
2/1/2027 
 1,850,000  
 1,710,365  
 1,465,552 

Belfor Holdings Inc. 
Services: Consumer 
Term Loan B-1 (11/23) 
Loan 
1M USD SOFR+   3.75 % 
 0.50% 
 9.08% 
10/25/2030 
 1,600,000  
 1,584,928  
 1,602,000 

Belron Finance US LLC 
Automotive 
Term Loan B 
Loan 
3M USD SOFR+   2.00 % 
 0.50% 
 7.58% 
4/13/2028 
 1,945,000  
 1,945,000  
 1,943,172 

Belron Finance US LLC 
Automotive 
Term Loan B 
Loan 
3M USD SOFR+   2.25 % 
 0.50% 
 7.66% 
4/18/2029 
 248,750  
 248,750  
 248,544 

Bengal Debt Merger Sub LLC 
Beverage, Food & Tobacco 
Term Loan 
Loan 
3M USD SOFR+   3.25 % 
 0.50% 
 8.70% 
1/24/2029 
 1,970,000  
 1,969,251  
 1,852,785 

Blackstone Mortgage Trust, Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan (6/21) 
Loan 
1M USD SOFR+   2.75 % 
 0.50% 
 8.19% 
4/23/2026 
 1,450,228  
 1,444,650  
 1,439,352 

Blackstone Mortgage Trust, Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan B 
Loan 
1M USD SOFR+   2.25 % 
 0.00% 
 7.69% 
4/23/2026 
 969,620  
 966,168  
 962,348 

Blue Tree Holdings, Inc. 
Chemicals, Plastics, & Rubber 
Term Loan (2/21) 
Loan 
3M USD SOFR+   2.50 % 
 0.00% 
 8.11% 
3/4/2028 
 972,500  
 971,083  
 967,229 

Bombardier Recreational Products, Inc. 
Consumer goods: Durable 
Term Loan 
Loan 
1M USD SOFR+   2.75 % 
 0.00% 
 8.08% 
1/22/2031 
 1,440,189  
 1,436,033  
 1,437,942 

Bombardier Recreational Products, Inc. 
Consumer goods: Durable 
Term Loan B3 
Loan 
1M USD SOFR+   2.75 % 
 0.50% 
 8.18% 
12/13/2029 
 493,769  
 482,991  
 493,833 

Boost Newco Borrower, LLC (Worldpay) 
Banking, Finance, Insurance & Real Estate 
Term Loan B 
Loan 
1M USD SOFR+   3.00 % 
 0.50% 
 8.33% 
1/31/2031 
 500,000  
 497,629  
 501,460 

Boxer Parent Company, Inc. 
High Tech Industries 
Term Loan USD (11/23) 
Loan 
1M USD SOFR+   4.25 % 
 0.00% 
 9.58% 
12/29/2028 
 1,012,255  
 1,007,334  
 1,015,018 

BrightSpring Health Services (Phoenix Guarantor) 
Healthcare & Pharmaceuticals 
Term Loan (02/24) 
Loan 
1M USD SOFR+   3.25 % 
 0.00% 
 8.58% 
2/21/2031 
 972,500  
 972,500  
 961,355 

BroadStreet Partners, Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan B3 
Loan 
1M USD SOFR+   3.00 % 
 0.00% 
 8.44% 
1/22/2027 
 2,918,464  
 2,915,588  
 2,913,007 

Brookfield WEC Holdings Inc. 
Energy: Electricity 
Term Loan B 
Loan 
1M USD SOFR+   2.75 % 
 0.00% 
 8.08% 
1/17/2031 
 1,447,688  
 1,447,688  
 1,442,028 

BROWN GROUP HOLDING, LLC 
Aerospace & Defense 
Term Loan B-2 
Loan 
1M USD SOFR+   3.00 % 
 0.00% 
 8.33% 
7/1/2029 
 493,750  
 483,706  
 492,856 

Buckeye Partners, L.P. 
Utilities: Oil & Gas 
Term Loan B2 
Loan 
1M USD SOFR+   2.50 % 
 0.00% 
 7.83% 
11/15/2030 
 333,333  
 332,779  
 333,393 

Buckeye Partners, L.P. 
Utilities: Oil & Gas 
Term Loan  B 3 
Loan 
1M USD SOFR+   2.00 % 
 0.00% 
 7.33% 
11/1/2026 
 1,595,639  
 1,589,524  
 1,595,910 

BW Gas & Convenience Holdings LLC 
Beverage, Food & Tobacco 
Term Loan B 
Loan 
1M USD SOFR+   3.50 % 
 0.50% 
 8.94% 
3/31/2028 
 2,437,500  
 2,421,791  
 2,400,938 

 


S-10
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

Callaway Golf Company 
Retail 
Term Loan B 
Loan 
1M USD SOFR+   3.50 % 
 0.00% 
 8.93% 
3/16/2030 
 496,250  
 491,660  
 496,200 

Calpine Corporation 
Utilities: Electric 
Term Loan B-10 (01/20) 
Loan 
3M USD LIBOR+   2.00 % 
 0.00% 
 3.87% 
8/12/2026 
 2,000,000  
 1,990,000  
 1,983,760 

Camping World, Inc. 
Retail 
Term Loan B (5/21) 
Loan 
1M USD SOFR+   2.50 % 
 0.75% 
 7.94% 
6/5/2028 
 2,462,025  
 2,277,630  
 2,401,238 

CAPSTONE BORROWER INC 
Services: Business 
Term Loan (06/23) 
Loan 
3M USD SOFR+   3.75 % 
 0.00% 
 9.10% 
6/15/2030 
 998,077  
 984,312  
 993,396 

CareerBuilder, LLC 
Services: Business 
Term Loan B3 
Loan 
3M USD SOFR+   6.75 % 
 0.00% 
 12.36% 
7/31/2026 
 3,930,582  
 3,912,784  
 589,587 

Castle US Holding Corporation 
Media: Advertising, Printing & Publishing 
Term Loan B (USD) 
Loan 
3M USD SOFR+   3.75 % 
 0.00% 
 9.35% 
1/27/2027 
 1,946,639  
 1,939,553  
 1,354,627 

CASTLELAKE AVIATION LLC 
Aerospace & Defense 
Term Loan B 
Loan 
3M USD SOFR+   2.75 % 
 0.50% 
 8.40% 
10/21/2027 
 990,000  
 983,747  
 989,228 

Catalent Pharma Solutions, Inc. 
Healthcare & Pharmaceuticals 
Term Loan B4 
Loan 
1M USD SOFR+   3.00 % 
 0.50% 
 8.32% 
2/22/2028 
 600,000  
 595,597  
 601,500 

Catalent Pharma Solutions, Inc. 
Healthcare & Pharmaceuticals 
Term Loan B3 (2/21) 
Loan 
1M USD SOFR+   2.00 % 
 0.50% 
 7.43% 
2/22/2028 
 598,462  
 587,525  
 597,588 

CBL & Associates Limited Partnership 
Retail 
Term Loan 11/21 
Loan 
1M USD SOFR+   2.75 % 
 1.00% 
 8.19% 
11/1/2025 
 2,464,605  
 2,167,043  
 2,214,029 

CCC Intelligent Solutions Inc. 
Services: Business 
Term Loan B 
Loan 
1M USD SOFR+   2.25 % 
 0.50% 
 7.69% 
9/16/2028 
 245,000  
 244,633  
 244,030 

CCI Buyer, Inc 
Telecommunications 
Term Loan 
Loan 
3M USD SOFR+   4.00 % 
 0.75% 
 9.35% 
12/17/2027 
 243,125  
 241,678  
 241,195 

CCRR Parent, Inc. 
Healthcare & Pharmaceuticals 
Term Loan 
Loan 
1M USD SOFR+   4.25 % 
 0.50% 
 9.68% 
3/5/2028 
 990,000  
 949,452  
 920,700 

CCRR Parent, Inc. 
Healthcare & Pharmaceuticals 
Term Loan B 
Loan 
1M USD SOFR+   3.75 % 
 0.75% 
 9.19% 
3/5/2028 
 972,500  
 969,580  
 866,741 

CCS-CMGC Holdings, Inc. 
Healthcare & Pharmaceuticals 
Term Loan 
Loan 
1M USD SOFR+   5.50 % 
 0.00% 
 10.83% 
9/25/2025 
 2,375,000  
 2,368,777  
 1,863,520 

CDK GLOBAL, INC. 
High Tech Industries 
Term Loan B (10/23) 
Loan 
3M USD SOFR+   4.00 % 
 0.00% 
 9.35% 
7/6/2029 
 992,500  
 967,482  
 994,406 

Cengage Learning, Inc. 
Media: Advertising, Printing & Publishing 
Term Loan B (6/21) 
Loan 
3M USD SOFR+   4.75 % 
 1.00% 
 10.33% 
7/14/2026 
 2,932,500  
 2,917,832  
 2,930,682 

CENTURI GROUP, INC. 
Construction & Building 
Term Loan B 
Loan 
1M USD SOFR+   2.50 % 
 0.50% 
 7.94% 
8/27/2028 
 868,330  
 862,415  
 868,191 

 


S-11
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

CenturyLink, Inc. 
Telecommunications 
Term Loan B (1/20) 
Loan 
1M USD SOFR+   2.25 % 
 0.00% 
 7.69% 
3/15/2027 
 3,838,165  
 3,835,627  
 2,781,480 

Charlotte Buyer, Inc. 
Services: Business 
Term Loan B 
Loan 
1M USD SOFR+   5.25 % 
 0.50% 
 10.57% 
2/11/2028 
 1,485,000  
 1,404,122  
 1,487,866 

Chemours Company, (The) 
Chemicals, Plastics, & Rubber 
Term Loan B2 
Loan 
1M USD SOFR+   3.50 % 
 0.50% 
 8.83% 
8/10/2028 
 2,393,717  
 2,355,365  
 2,345,842 

Churchill Downs Incorporated 
Hotel, Gaming & Leisure 
Term Loan B1 (3/21) 
Loan 
1M USD SOFR+   2.00 % 
 0.00% 
 7.43% 
3/17/2028 
 486,250  
 485,591  
 485,642 

CIMPRESS PUBLIC LIMITED COMPANY 
Media: Advertising, Printing & Publishing 
USD Term Loan 
Loan 
1M USD SOFR+   3.50 % 
 0.50% 
 8.94% 
5/17/2028 
 1,959,849  
 1,885,810  
 1,951,676 

CITADEL SECURITIES LP 
Banking, Finance, Insurance & Real Estate 
Term Loan B (01/24) 
Loan 
1M USD SOFR+   2.25 % 
 0.00% 
 7.58% 
7/29/2030 
 4,863,365  
 4,862,868  
 4,857,286 

Citco Funding LLC 
Banking, Finance, Insurance & Real Estate 
Term Loa 1st Lien Incremental 
Loan 
3M USD SOFR+   3.25 % 
 0.50% 
 8.57% 
4/27/2028 
 997,500  
 992,828  
 997,919 

Clarios Global LP 
Automotive 
Term Loan (12/23) 
Loan 
1M USD SOFR+   3.00 % 
 0.00% 
 8.33% 
5/6/2030 
 1,197,000  
 1,191,616  
 1,196,629 

Claros Mortgage Trust, Inc 
Banking, Finance, Insurance & Real Estate 
Term Loan B-1 (11/21) 
Loan 
1M USD SOFR+   4.50 % 
 0.50% 
 9.92% 
8/9/2026 
 3,404,430  
 3,390,583  
 3,132,076 

CLYDESDALE ACQUISITION HOLDINGS, INC. 
Containers, Packaging & Glass 
Term Loan B 
Loan 
1M USD SOFR+   3.68 % 
 0.50% 
 9.10% 
4/13/2029 
 1,477,500  
 1,448,088  
 1,475,343 

Columbus McKinnon Corporation 
Capital Equipment 
Term Loan (4/21) 
Loan 
3M USD SOFR+   2.75 % 
 0.50% 
 8.39% 
5/14/2028 
 406,951  
 406,326  
 407,207 

Conduent, Inc. 
Services: Business 
Term Loan B 
Loan 
1M USD SOFR+   4.25 % 
 0.50% 
 9.69% 
10/16/2028 
 2,762,330  
 2,701,073  
 2,702,470 

Connect Finco SARL 
Telecommunications 
Term Loan (1/21) 
Loan 
1M USD SOFR+   3.50 % 
 1.00% 
 8.83% 
12/11/2026 
 2,887,500  
 2,809,993  
 2,882,678 

Consolidated Communications, Inc. 
Telecommunications 
Term Loan B 
Loan 
1M USD SOFR+   3.50 % 
 0.75% 
 8.94% 
10/2/2027 
 2,714,005  
 2,553,865  
 2,544,379 

CORAL-US CO-BORROWER LLC 
Telecommunications 
Term Loan B-5 
Loan 
1M USD SOFR+   2.25 % 
 0.00% 
 7.68% 
1/31/2028 
 4,000,000  
 3,990,860  
 3,950,000 

Corelogic, Inc. 
Services: Business 
Term Loan (4/21) 
Loan 
1M USD SOFR+   3.50 % 
 0.50% 
 8.94% 
6/2/2028 
 2,443,750  
 2,436,006  
 2,372,344 

Cortes NP Acquisition Corp (Vertiv) 
Capital Equipment 
Term Loan B (12/23) 
Loan 
1M USD SOFR+   2.50 % 
 0.00% 
 7.94% 
3/2/2027 
 1,940,138  
 1,940,138  
 1,941,903 

Creative Artists Agency, LLC 
Media: Diversified & Production 
Term Loan B (02/23) 
Loan 
1M USD SOFR+   3.50 % 
 0.00% 
 8.83% 
11/27/2028 
 1,588,004  
 1,577,748  
 1,588,449 

CROCS INC 
Consumer goods: Durable 
Term Loan B (01/24) 
Loan 
1M USD SOFR+   2.25 % 
 0.50% 
 7.58% 
2/19/2029 
 1,230,000  
 1,190,854  
 1,230,923 

Cross Financial Corp 
Banking, Finance, Insurance & Real Estate 
Term Loan B2 
Loan 
1M USD SOFR+   3.50 % 
 0.75% 
 8.83% 
9/15/2027 
 487,500  
 487,355  
 486,891 

 


S-12
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

Crown Subsea Communications Holding, Inc. 
Construction & Building 
Term Loan B (01/24) 
Loan 
3M USD SOFR+   4.75 % 
 0.75% 
 10.07% 
1/30/2031 
 2,400,000  
 2,376,371  
 2,409,000 

CSC Holdings LLC (Neptune Finco Corp.) 
Media: Broadcasting & Subscription 
Term Loan B-5 
Loan 
1M USD LIBOR+   2.50 % 
 0.00% 
 7.93% 
4/15/2027 
 480,000  
 480,000  
 448,277 

CSC Holdings LLC (Neptune Finco Corp.) 
Media: Broadcasting & Subscription 
Term Loan 12/22 
Loan 
1M USD SOFR+   4.50 % 
 0.00% 
 9.82% 
4/15/2027 
 2,376,032  
 2,368,120  
 2,307,222 

CTC Holdings, LP 
Banking, Finance, Insurance & Real Estate 
Term Loan B 
Loan 
3M USD SOFR+   5.00 % 
 0.50% 
 10.48% 
2/15/2029 
 2,210,625  
 2,165,966  
 2,194,045 

CTS Midco, LLC 
High Tech Industries 
Term Loan B 
Loan 
3M USD SOFR+   6.00 % 
 1.00% 
 11.57% 
11/2/2027 
 1,937,017  
 1,903,074  
 1,830,481 

Daseke Inc 
Transportation: Cargo 
Term Loan 2/21 
Loan 
1M USD SOFR+   4.00 % 
 0.75% 
 9.44% 
3/5/2028 
 1,162,500  
 1,159,080  
 1,162,860 

Dave & Buster’s Inc. 
Hotel, Gaming & Leisure 
Term Loan B (1/24) 
Loan 
1M USD SOFR+   3.25 % 
 0.50% 
 8.63% 
6/29/2029 
 990,019  
 949,041  
 990,791 

DCert Buyer, Inc. 
High Tech Industries 
Term Loan 
Loan 
1M USD SOFR+   4.00 % 
 0.00% 
 9.33% 
10/16/2026 
 1,454,660  
 1,454,660  
 1,442,426 

Delek US Holdings, Inc. 
Utilities: Oil & Gas 
Term Loan B (11/22) 
Loan 
1M USD SOFR+   3.50 % 
 0.50% 
 8.93% 
11/16/2029 
 5,346,000  
 5,244,974  
 5,325,952 

Delos Aircraft DAC 
Transportation: Consumer 
Term Loan B 
Loan 
3M USD SOFR+   2.00 % 
 0.00% 
 7.35% 
10/31/2027 
 250,000  
 250,000  
 250,438 

Delta 2 Lux Sarl 
Hotel, Gaming & Leisure 
Term Loan B 
Loan 
3M USD SOFR+   2.25 % 
 0.50% 
 7.60% 
1/15/2030 
 2,000,000  
 1,991,389  
 1,997,000 

Derby Buyer LLC 
Chemicals, Plastics, & Rubber 
Term Loan (09/23) 
Loan 
1M USD SOFR+   4.25 % 
 0.50% 
 9.58% 
11/1/2030 
 625,000  
 616,061  
 625,394 

DexKo Global, Inc. (Dragon Merger) 
Automotive 
Term Loan (9/21) 
Loan 
3M USD SOFR+   3.75 % 
 0.50% 
 9.36% 
10/4/2028 
 982,500  
 979,722  
 978,206 

DG Investment Intermediate Holdings 2, Inc. 
Aerospace & Defense 
Incremental Term Loan (3/22) 
Loan 
1M USD SOFR+   4.75 % 
 0.75% 
 10.08% 
3/31/2028 
 493,750  
 477,680  
 492,051 

Diamond Sports Group, LLC 
Media: Broadcasting & Subscription 
1st Priority Term Loan 
Loan 
1M USD SOFR+   10.00 % 
 1.00% 
 15.43% 
5/25/2026 
 152,224  
 149,462  
 146,896 

DIRECTV FINANCING, LLC 
Media: Broadcasting & Subscription 
Term Loan 
Loan 
3M USD SOFR+   5.25 % 
 0.75% 
 10.83% 
8/2/2029 
 3,190,000  
 3,169,423  
 3,181,036 

DISCOVERY PURCHASER CORPORATION 
Chemicals, Plastics, & Rubber 
Term Loan 
Loan 
3M USD SOFR+   4.38 % 
 0.50% 
 9.71% 
10/4/2029 
 1,485,028  
 1,383,712  
 1,476,207 

Dispatch Acquisition Holdings, LLC 
Environmental Industries 
Term Loan B (3/21) 
Loan 
3M USD SOFR+   4.25 % 
 0.75% 
 9.75% 
3/25/2028 
 487,500  
 484,443  
 452,463 

DOMTAR CORPORATION 
Forest Products & Paper 
Term Loan 9/21 
Loan 
1M USD SOFR+   5.50 % 
 0.75% 
 10.94% 
11/30/2028 
 3,243,968  
 3,187,785  
 3,163,874 

DOTDASH MEREDITH, INC. 
Media: Advertising, Printing & Publishing 
Term Loan B 
Loan 
1M USD SOFR+   4.00 % 
 0.50% 
 9.43% 
11/30/2028 
 1,974,747  
 1,809,468  
 1,955,000 

DRI HOLDING INC. 
Media: Advertising, Printing & Publishing 
Term Loan (12/21) 
Loan 
1M USD SOFR+   5.25 % 
 0.50% 
 10.68% 
12/15/2028 
 3,932,462  
 3,808,999  
 3,605,596 

DRW Holdings, LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan (2/21) 
Loan 
1M USD SOFR+   3.75 % 
 0.00% 
 9.19% 
3/1/2028 
 6,370,000  
 6,338,820  
 6,354,075 

 


S-13
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

DTZ U.S. Borrower, LLC 
Construction & Building 
Term Loan 
Loan 
1M USD SOFR+   2.75 % 
 0.00% 
 8.19% 
8/21/2025 
 198,929  
 198,685  
 198,432 

DTZ U.S. Borrower, LLC 
Construction & Building 
Term Loan (01/23) 
Loan 
1M USD SOFR+   3.25 % 
 0.50% 
 8.68% 
1/31/2030 
 2,024,241  
 2,022,091  
 1,999,788 

DTZ U.S. Borrower, LLC 
Construction & Building 
Term Loan (08/23) 
Loan 
1M USD SOFR+   4.00 % 
 0.50% 
 9.33% 
1/31/2030 
 1,100,000  
 1,074,202  
 1,097,250 

EAB Global, Inc. 
Services: Business 
Term Loan (08/21) 
Loan 
1M USD SOFR+   3.50 % 
 0.50% 
 8.94% 
8/16/2028 
 980,000  
 976,771  
 977,344 

Echo Global Logistics, Inc. 
Services: Business 
Term Loan 
Loan 
1M USD SOFR+   3.50 % 
 0.50% 
 8.93% 
11/23/2028 
 1,965,000  
 1,962,209  
 1,926,761 

Edelman Financial Group Inc., The 
Banking, Finance, Insurance & Real Estate 
Term Loan B (3/21) 
Loan 
1M USD SOFR+   3.50 % 
 0.75% 
 8.94% 
4/7/2028 
 2,166,328  
 2,161,731  
 2,158,616 

Electrical Components Inter., Inc. 
Capital Equipment 
Term Loan (6/18) 
Loan 
1M USD SOFR+   4.25 % 
 0.00% 
 9.68% 
6/26/2025 
 1,868,421  
 1,868,421  
 1,861,415 

ELECTRON BIDCO INC. 
Healthcare & Pharmaceuticals 
Term Loan 
Loan 
1M USD SOFR+   3.00 % 
 0.50% 
 8.44% 
11/1/2028 
 491,250  
 489,769  
 490,253 

ELO Touch Solutions, Inc. 
Media: Diversified & Production 
Term Loan (12/18) 
Loan 
1M USD SOFR+   6.50 % 
 0.00% 
 11.94% 
12/14/2025 
 2,522,373  
 2,488,308  
 2,485,798 

Embecta Corp 
Healthcare & Pharmaceuticals 
Term Loan B 
Loan 
1M USD SOFR+   3.00 % 
 0.50% 
 8.33% 
3/30/2029 
 2,598,596  
 2,581,552  
 2,366,360 

Emerson Climate Technologies Inc 
Services: Business 
Term Loan B (04/23) 
Loan 
1M USD SOFR+   2.50 % 
 0.00% 
 7.79% 
5/31/2030 
 1,000,000  
 995,376  
 997,250 

Endo Luxembourg Finance Company I S.a.r.l. 
Healthcare & Pharmaceuticals 
Term Loan (3/21) 
Loan 
Prime   6.00 % 
 0.75% 
 14.50% 
3/27/2028 
 2,335,285  
 2,330,451  
 1,522,606 

Endure Digital, Inc. 
High Tech Industries 
Term Loan B 
Loan 
6M USD SOFR+   3.50 % 
 0.75% 
 9.42% 
2/10/2028 
 2,437,500  
 2,430,093  
 2,380,048 

Entain Holdings (Gibraltar) Limited 
Hotel, Gaming & Leisure 
Term Loan B (10/22) 
Loan 
3M USD SOFR+   3.50 % 
 0.50% 
 8.95% 
10/30/2029 
 1,487,496  
 1,472,128  
 1,489,355 

EOS U.S. FINCO LLC 
Transportation: Cargo 
Term Loan 
Loan 
3M USD SOFR+   5.75 % 
 0.50% 
 11.10% 
10/6/2029 
 975,000  
 908,088  
 871,104 

Equiniti Group PLC 
Services: Business 
Term Loan B 
Loan 
6M USD SOFR+   4.50 % 
 0.50% 
 9.93% 
12/11/2028 
 980,000  
 973,017  
 981,470 

Evertec Group LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan B (09/23) 
Loan 
1M USD SOFR+   3.50 % 
 0.50% 
 8.83% 
10/30/2030 
 1,125,000  
 1,108,675  
 1,123,594 

EyeCare Partners, LLC 
Healthcare & Pharmaceuticals 
Term Loan 
Loan 
3M USD SOFR+   3.75 % 
 0.00% 
 9.39% 
2/18/2027 
 -  
 1,951  
 - 

Fiesta Purchaser, Inc. 
Beverage, Food & Tobacco 
First Lien TLB 
Loan 
1M USD SOFR+   4.00 % 
 0.00% 
 9.32% 
2/12/2031 
 500,000  
 495,088  
 499,315 

Finco I LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan B (08/23) 
Loan 
3M USD SOFR+   3.00 % 
 0.00% 
 8.31% 
6/27/2029 
 2,816,795  
 2,813,980  
 2,815,386 

 


S-14
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

First Brands Group, LLC 
Automotive 
1st Lien Term Loan (3/21) 
Loan 
3M USD SOFR+   5.00 % 
 1.00% 
 10.57% 
3/30/2027 
 4,862,500  
 4,816,997  
 4,868,578 

First Eagle Investment Management 
Banking, Finance, Insurance & Real Estate 
Refinancing Term Loan 
Loan 
3M USD SOFR+   2.50 % 
 0.00% 
 7.95% 
2/1/2027 
 5,091,652  
 5,082,259  
 5,068,332 

First Student Bidco Inc. 
Transportation: Consumer 
Term Loan B 
Loan 
3M USD SOFR+   3.00 % 
 0.50% 
 8.61% 
7/21/2028 
 715,360  
 711,800  
 709,694 

First Student Bidco Inc. 
Transportation: Consumer 
Term Loan C 
Loan 
3M USD SOFR+   3.00 % 
 0.50% 
 8.61% 
7/21/2028 
 216,966  
 215,877  
 215,248 

Fitness International, LLC (LA Fitness) 
Services: Consumer 
Term Loan  B (1/24) 
Loan 
1M USD SOFR+   5.25 % 
 1.00% 
 10.58% 
2/5/2029 
 1,200,000  
 1,164,361  
 1,165,500 

Flutter Financing B.V. 
Hotel, Gaming & Leisure 
Third Amendment 2028-B Term Loan 
Loan 
3M USD SOFR+   3.25 % 
 0.50% 
 8.86% 
7/21/2028 
 309,759  
 304,101  
 310,103 

Flutter Financing B.V. 
Hotel, Gaming & Leisure 
Term Loan B3 (11/23) 
Loan 
3M USD SOFR+   2.25 % 
 0.50% 
 7.70% 
11/25/2030 
 3,000,000  
 2,992,850  
 2,984,370 

FOCUS FINANCIAL PARTNERS, LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan B7 
Loan 
1M USD SOFR+   2.75 % 
 0.50% 
 8.08% 
6/30/2028 
 1,472,388  
 1,458,275  
 1,461,345 

Franchise Group, Inc. 
Services: Consumer 
First Out Term Loan 
Loan 
6M USD SOFR+   4.75 % 
 0.75% 
 10.36% 
3/10/2026 
 799,104  
 795,310  
 703,211 

Franchise Group, Inc. 
Services: Consumer 
Term Loan B 
Loan 
3M USD SOFR+   4.75 % 
 0.75% 
 10.33% 
3/10/2026 
 2,977,500  
 2,874,281  
 2,612,756 

Franklin Square Holdings, L.P. 
Banking, Finance, Insurance & Real Estate 
Term Loan 
Loan 
1M USD SOFR+   2.25 % 
 0.00% 
 7.68% 
8/1/2025 
 4,263,723  
 4,255,884  
 4,258,394 

Froneri International (R&R Ice Cream) 
Beverage, Food & Tobacco 
Term Loan B-2 
Loan 
1M USD SOFR+   2.25 % 
 0.00% 
 7.68% 
1/29/2027 
 1,930,000  
 1,928,989  
 1,928,340 

Garrett LX III S.a r.l. 
Automotive 
Dollar Term Loan 
Loan 
3M USD SOFR+   3.25 % 
 0.50% 
 8.82% 
4/30/2028 
 1,466,250  
 1,461,820  
 1,465,634 

Gemini HDPE LLC 
Chemicals, Plastics, & Rubber 
Term Loan B (12/20) 
Loan 
3M USD SOFR+   3.00 % 
 0.50% 
 8.57% 
12/31/2027 
 2,183,488  
 2,172,849  
 2,163,466 

Genesee & Wyoming, Inc. 
Transportation: Cargo 
Term Loan (11/19) 
Loan 
3M USD SOFR+   2.00 % 
 0.00% 
 7.45% 
12/30/2026 
 1,443,750  
 1,440,683  
 1,443,577 

GGP Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan B 
Loan 
1M USD LIBOR+   2.50 % 
 0.00% 
 2.96% 
8/27/2025 
 2,781,634  
 2,604,347  
 2,766,864 

GIP Pilot Acquisition Partners, L.P. 
Energy: Oil & Gas 
Term Loan 
Loan 
3M USD SOFR+   3.00 % 
 0.00% 
 8.33% 
10/4/2030 
 500,000  
 497,577  
 499,585 

Global Tel*Link Corporation 
Telecommunications 
Term Loan B 
Loan 
1M USD SOFR+   4.25 % 
 0.00% 
 9.68% 
11/29/2025 
 4,846,612  
 4,750,154  
 4,708,290 

Go Daddy Operating Company, LLC 
High Tech Industries 
Term Loan 2/21 
Loan 
1M USD SOFR+   2.00 % 
 0.00% 
 7.44% 
8/10/2027 
 947,411  
 947,411  
 946,984 

GOLDEN WEST PACKAGING GROUP LLC 
Forest Products & Paper 
Term Loan (11/21) 
Loan 
1M USD SOFR+   5.25 % 
 0.75% 
 10.69% 
12/1/2027 
 1,875,000  
 1,862,167  
 1,556,250 

 


S-15
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

GOTO GROUP, INC. 
High Tech Industries 
First Lien Term Loan 
Loan 
1M USD SOFR+   4.75 % 
 0.00% 
 10.17% 
4/30/2028 
 1,254,792  
 730,596  
 1,198,326 

GOTO GROUP, INC. 
High Tech Industries 
Second-Out Term Loan (02/24) 
Loan 
1M USD SOFR+   4.75 % 
 0.00% 
 10.17% 
4/30/2028 
 1,732,808  
 1,646,943  
 1,199,970 

Graham Packaging Co Inc 
Containers, Packaging & Glass 
Term Loan (2/21) 
Loan 
1M USD SOFR+   3.00 % 
 0.75% 
 8.44% 
8/7/2027 
 945,831  
 942,144  
 944,554 

Great Outdoors Group, LLC 
Retail 
Term Loan B2 
Loan 
1M USD SOFR+   3.75 % 
 0.75% 
 9.19% 
3/6/2028 
 970,169  
 967,400  
 969,994 

Griffon Corporation 
Consumer goods: Durable 
Term Loan B 
Loan 
3M USD SOFR+   2.25 % 
 0.50% 
 7.75% 
1/24/2029 
 144,063  
 143,842  
 143,838 

Grosvenor Capital Management Holdings, LLLP 
Banking, Finance, Insurance & Real Estate 
Amendment 5 Term Loan 
Loan 
1M USD SOFR+   2.50 % 
 0.50% 
 7.94% 
2/24/2028 
 2,807,931  
 2,806,739  
 2,807,061 

Groupe Solmax Inc. 
Environmental Industries 
Term Loan (6/21) 
Loan 
3M USD SOFR+   4.75 % 
 0.75% 
 10.36% 
5/27/2028 
 2,473,405  
 2,125,105  
 2,402,740 

GYP HOLDINGS III CORP. 
Construction & Building 
Term Loan  (1/24) 
Loan 
1M USD SOFR+   2.25 % 
 0.00% 
 7.58% 
5/12/2030 
 249,375  
 248,230  
 249,375 

Harbor Freight Tools USA, Inc. 
Retail 
Term Loan B (06/21) 
Loan 
1M USD SOFR+   2.75 % 
 0.50% 
 8.19% 
10/19/2027 
 3,344,665  
 3,330,419  
 3,319,212 

Helix Gen Funding, LLc 
Energy: Electricity 
Term Loan 
Loan 
3M USD SOFR+   4.75 % 
 1.00% 
 10.10% 
12/31/2027 
 932,597  
 915,944  
 933,763 

Hertz Corporation (The) 
Transportation: Consumer 
Term Loan B 
Loan 
1M USD SOFR+   3.75 % 
 0.00% 
 9.07% 
6/30/2028 
 500,000  
 490,436  
 481,875 

Hillman Group Inc. (The) (New) 
Consumer goods: Durable 
Term Loan B-1 (2/21) 
Loan 
1M USD SOFR+   2.75 % 
 0.50% 
 8.19% 
7/14/2028 
 3,172,373  
 3,168,887  
 3,167,266 

Hilton Domestic Operating Company Inc. 
Hotel, Gaming & Leisure 
Term Loan B 4 
Loan 
1M USD SOFR+   2.00 % 
 0.00% 
 7.42% 
11/8/2030 
 1,500,000  
 1,496,471  
 1,501,020 

Hilton Grand Vacations Borrower LLC 
Hotel, Gaming & Leisure 
Term Loan (3/21) 
Loan 
1M USD SOFR+   2.75 % 
 0.50% 
 8.19% 
8/2/2028 
 497,455  
 497,455  
 496,834 

Hilton Grand Vacations Borrower LLC 
Hotel, Gaming & Leisure 
Term Loan B 
Loan 
1M USD SOFR+   2.75 % 
 0.00% 
 8.18% 
8/2/2028 
 500,000  
 500,000  
 499,375 

HLF Financing SARL (Herbalife) 
Consumer goods: Non-durable 
Term Loan B (08/18) 
Loan 
1M USD SOFR+   2.50 % 
 0.00% 
 7.94% 
8/18/2025 
 3,116,400  
 3,113,557  
 3,044,598 

Holley Purchaser, Inc 
Automotive 
Term Loan (11/21) 
Loan 
1M USD SOFR+   3.75 % 
 0.75% 
 9.19% 
11/17/2028 
 2,254,003  
 2,247,557  
 2,188,795 

Hudson River Trading LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan (3/21) 
Loan 
1M USD SOFR+   3.00 % 
 0.00% 
 8.44% 
3/17/2028 
 5,835,000  
 5,798,864  
 5,792,171 

Hunter Douglas Inc 
Consumer goods: Durable 
Term Loan B-1 
Loan 
3M USD SOFR+   3.50 % 
 0.50% 
 8.82% 
2/26/2029 
 2,474,937  
 2,235,702  
 2,442,466 

Hyperion Refinance S.a.r.l. 
Banking, Finance, Insurance & Real Estate 
Term Loan B 
Loan 
3M USD SOFR+   3.50 % 
 0.50% 
 8.81% 
2/15/2031 
 3,000,000  
 2,985,024  
 2,983,440 

 


S-16
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

Idera, Inc. 
High Tech Industries 
Term Loan (02/21) 
Loan 
3M USD SOFR+   3.75 % 
 0.75% 
 9.21% 
3/2/2028 
 4,762,143  
 4,756,197  
 4,730,379 

IMA Financial Group, Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan (10/21) 
Loan 
1M USD SOFR+   3.75 % 
 0.50% 
 9.19% 
11/1/2028 
 2,458,728  
 2,449,919  
 2,452,581 

INDY US BIDCO, LLC 
Services: Business 
Term Loan (11/21) 
Loan 
1M USD SOFR+   3.75 % 
 0.00% 
 9.08% 
3/6/2028 
 2,193,266  
 2,192,568  
 2,119,243 

INEOS 226 Ltd. 
Chemicals, Plastics, & Rubber 
Term Loan 3/23 
Loan 
1M USD SOFR+   3.75 % 
 0.00% 
 9.18% 
3/13/2030 
 497,500  
 492,907  
 490,450 

Ineos US Finance LLC 
Chemicals, Plastics, & Rubber 
Term Loan C 
Loan 
1M USD SOFR+   3.50 % 
 0.00% 
 8.93% 
2/18/2030 
 995,000  
 985,838  
 985,259 

INEOS US PETROCHEM LLC 
Chemicals, Plastics, & Rubber 
Term Loan B 
Loan 
1M USD SOFR+   4.25 % 
 0.00% 
 9.68% 
4/2/2029 
 2,714,874  
 2,657,733  
 2,667,363 

Informatica Inc. 
High Tech Industries 
Term Loan B (10/21) 
Loan 
1M USD SOFR+   2.75 % 
 0.00% 
 8.19% 
10/27/2028 
 491,250  
 491,064  
 491,250 

Ingram Micro Inc. 
Wholesale 
Term Loan (09/23) 
Loan 
3M USD SOFR+   3.00 % 
 0.50% 
 8.61% 
6/30/2028 
 1,095,000  
 1,087,525  
 1,093,631 

Inmar, Inc. 
Services: Business 
Term Loan (06/23) 
Loan 
1M USD SOFR+   5.50 % 
 1.00% 
 10.83% 
5/1/2026 
 3,333,250  
 3,240,468  
 3,305,117 

Innophos, Inc. 
Chemicals, Plastics, & Rubber 
Term Loan B 
Loan 
1M USD SOFR+   3.25 % 
 0.00% 
 8.58% 
2/4/2027 
 481,250  
 480,346  
 475,475 

INSTANT BRANDS HOLDINGS INC. 
Consumer goods: Durable 
Instant Brands TL 
Loan 
Prime   4.00 % 
 0.75% 
 14.50% 
4/7/2028 
 10,085  
 10,085  
 10,085 

INSTANT BRANDS HOLDINGS INC. (b) 
Consumer goods: Durable 
Term Loan 4/21 
Loan 
Prime   4.00 % 
 0.75% 
 14.50% 
4/7/2028 
 3,942,576  
 3,929,234  
 256,267 

INSTANT BRANDS HOLDINGS INC. (c) 
Consumer goods: Durable 
PIK DIP Term Loan 
Loan 
1M USD SOFR+   3.00 % 
 1.00% 
 15.45% 
1/31/2024 
 1,523,653  
 1,523,115  
 1,557,935 

IRB Holding Corporation 
Beverage, Food & Tobacco 
Term Loan B 
Loan 
1M USD SOFR+   2.75 % 
 0.75% 
 8.18% 
12/15/2027 
 494,962  
 490,830  
 494,101 

Isagenix International, LLC (c) 
Beverage, Food & Tobacco 
Term Loan 
Loan 
6M USD SOFR+   2.50 % 
 0.00% 
 2.50% 
4/13/2028 
 1,258,790  
 838,779  
 1,082,559 

Isolved Inc. 
Services: Business 
Term Loan 
Loan 
6M USD SOFR+   4.00 % 
 0.50% 
 9.48% 
10/5/2030 
 625,000  
 618,886  
 626,563 

Jane Street Group 
Banking, Finance, Insurance & Real Estate 
Term Loan 
Loan 
1M USD SOFR+   2.50 % 
 0.00% 
 7.94% 
1/26/2028 
 3,880,000  
 3,878,565  
 3,869,602 

Journey Personal Care Corp. 
Consumer goods: Non-durable 
Term Loan B 
Loan 
1M USD SOFR+   4.25 % 
 0.75% 
 9.69% 
3/1/2028 
 2,925,000  
 2,876,836  
 2,850,647 

JP Intermediate B, LLC 
Consumer goods: Non-durable 
Term Loan 7/23 
Loan 
3M USD SOFR+   5.50 % 
 1.00% 
 11.07% 
11/20/2027 
 3,456,884  
 3,442,560  
 276,551 

Kleopatra Finco S.a r.l. 
Containers, Packaging & Glass 
Term Loan (1/21) (USD) 
Loan 
6M USD SOFR+   4.73 % 
 0.50% 
 10.27% 
2/12/2026 
 1,458,750  
 1,456,824  
 1,400,400 

 


S-17
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

Kodiak BP, LLC 
Construction & Building 
Term Loan 
Loan 
3M USD SOFR+   3.25 % 
 0.75% 
 8.86% 
3/13/2028 
 486,159  
 485,291  
 485,211 

Koppers Inc 
Chemicals, Plastics, & Rubber 
Term Loan B 
Loan 
1M USD SOFR+   3.50 % 
 0.50% 
 8.93% 
4/10/2030 
 995,006  
 967,558  
 998,121 

KREF Holdings X LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan (11/21) 
Loan 
1M USD SOFR+   3.50 % 
 0.50% 
 8.93% 
9/1/2027 
 486,325  
 479,475  
 464,440 

Lakeland Tours, LLC (c) 
Hotel, Gaming & Leisure 
Holdco Fixed Term Loan 
Loan 
Fixed   0.00 % 
 0.00% 
 8.00% 
9/27/2027 
 1,127,568  
 568,253  
 761,108 

Lealand Finance Company B.V. (c) 
Energy: Oil & Gas 
Exit Term Loan 
Loan 
1M USD SOFR+   1.00 % 
 0.00% 
 6.44% 
6/30/2025 
 355,751  
 355,751  
 138,149 

LHS BORROWER, LLC 
Construction & Building 
Term Loan (02/22) 
Loan 
1M USD SOFR+   4.75 % 
 0.50% 
 10.18% 
2/16/2029 
 2,475,771  
 2,084,045  
 2,310,216 

Lifetime Brands, Inc 
Consumer goods: Non-durable 
Term Loan 
Loan 
1M USD SOFR+   5.50 % 
 1.00% 
 10.94% 
8/26/2027 
 1,659,313  
 1,653,207  
 1,595,015 

Liquid Tech Solutions Holdings, LLC 
Services: Business 
Term Loan 
Loan 
1M USD SOFR+   4.75 % 
 0.75% 
 10.19% 
3/17/2028 
 975,000  
 972,922  
 957,938 

LOYALTY VENTURES INC. (b) 
Services: Business 
Term Loan B 
Loan 
Prime   5.50 % 
 0.50% 
 14.00% 
11/3/2027 
 2,913,525  
 2,902,171  
 25,493 

LPL Holdings, Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan B1 
Loan 
1M USD SOFR+   1.75 % 
 0.00% 
 7.18% 
11/11/2026 
 1,195,404  
 1,194,671  
 1,194,125 

LSF11 A5 HOLDCO LLC 
Chemicals, Plastics, & Rubber 
Term Loan (01/23) 
Loan 
1M USD SOFR+   4.25 % 
 0.50% 
 9.68% 
10/14/2028 
 1,492,500  
 1,473,942  
 1,491,754 

LSF11 A5 HOLDCO LLC 
Chemicals, Plastics, & Rubber 
Term Loan 
Loan 
1M USD SOFR+   3.50 % 
 0.50% 
 8.94% 
10/16/2028 
 245,625  
 244,848  
 244,473 

LSF11 TRINITY BIDCO INC 
Aerospace & Defense 
Term Loan B 
Loan 
1M USD SOFR+   4.00 % 
 0.00% 
 9.32% 
6/14/2030 
 980,756  
 967,038  
 980,756 

LSF9 Atlantis Holdings, LLC (A Wireless) 
Retail 
Term Loan  (2/24) 
Loan 
1M USD SOFR+   6.50 % 
 0.75% 
 11.83% 
3/31/2029 
 2,775,000  
 2,700,276  
 2,775,860 

MAGNITE, INC. 
Services: Business 
Term Loan B (01/24) 
Loan 
1M USD SOFR+   4.50 % 
 0.00% 
 9.82% 
2/6/2031 
 3,250,000  
 3,218,266  
 3,241,875 

Marriott Ownership Resorts, Inc. 
Hotel, Gaming & Leisure 
Term Loan (11/19) 
Loan 
1M USD SOFR+   1.75 % 
 0.00% 
 7.18% 
8/29/2025 
 1,317,074  
 1,317,074  
 1,312,543 

Match Group, Inc, The 
Services: Consumer 
Term Loan (1/20) 
Loan 
3M USD SOFR+   1.75 % 
 0.00% 
 7.27% 
2/15/2027 
 250,000  
 249,741  
 249,063 

Max US Bidco Inc. 
Beverage, Food & Tobacco 
Term Loan B 
Loan 
3M USD SOFR+   5.00 % 
 0.50% 
 10.35% 
10/3/2030 
 2,000,000  
 1,870,298  
 1,832,500 

Mayfield Agency Borrower Inc. (FeeCo) 
Banking, Finance, Insurance & Real Estate 
First Lien Term Loan B (12/23) 
Loan 
1M USD SOFR+   4.25 % 
 0.00% 
 9.58% 
2/28/2028 
 3,432,772  
 3,346,276  
 3,432,772 

McGraw-Hill Education, Inc. 
Media: Advertising, Printing & Publishing 
Term Loan (07/21) 
Loan 
1M USD SOFR+   4.75 % 
 0.50% 
 10.19% 
7/28/2028 
 1,955,000  
 1,940,387  
 1,946,281 

 


S-18
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

MedAssets Software Inter Hldg, Inc. 
High Tech Industries 
Term Loan (11/21) (USD) 
Loan 
1M USD SOFR+   4.00 % 
 0.50% 
 9.44% 
12/18/2028 
 491,250  
 488,835  
 409,275 

Mermaid Bidco Inc. 
High Tech Industries 
Term Loan B2 
Loan 
3M USD SOFR+   4.50 % 
 0.75% 
 9.88% 
12/22/2027 
 1,966,412  
 1,947,595  
 1,968,870 

Michaels Companies Inc 
Retail 
Term Loan B (Magic Mergeco) 
Loan 
3M USD SOFR+   4.25 % 
 0.75% 
 9.86% 
4/8/2028 
 2,442,400  
 2,429,364  
 1,996,417 

MKS Instruments, Inc. 
High Tech Industries 
Term Loan B 
Loan 
1M USD SOFR+   2.50 % 
 0.50% 
 7.82% 
8/17/2029 
 1,971,537  
 1,967,675  
 1,966,253 

Momentive Performance Materials Inc. 
Chemicals, Plastics, & Rubber 
Term Loan (03/23) 
Loan 
1M USD SOFR+   4.50 % 
 0.00% 
 9.83% 
3/28/2028 
 496,250  
 479,007  
 485,084 

Moneygram International, Inc. 
Services: Business 
Term Loan 
Loan 
3M USD SOFR+   5.50 % 
 0.50% 
 10.88% 
5/31/2030 
 2,993,750  
 2,617,290  
 2,936,989 

Mosel Bidco SE 
High Tech Industries 
Term Loan B 
Loan 
3M USD SOFR+   4.75 % 
 0.50% 
 10.10% 
9/16/2030 
 500,000  
 495,262  
 500,625 

MPH Acquisition Holdings LLC (Multiplan) 
Services: Business 
Term Loan B (08/21) 
Loan 
3M USD SOFR+   4.25 % 
 0.50% 
 9.85% 
9/1/2028 
 2,962,121  
 2,734,973  
 2,861,320 

NAB Holdings, LLC (North American Bancard) 
Banking, Finance, Insurance & Real Estate 
Term Loan (11/21) 
Loan 
3M USD SOFR+   2.75 % 
 0.50% 
 8.25% 
11/23/2028 
 2,940,000  
 2,935,048  
 2,929,504 

Napa Management Services Corp 
Healthcare & Pharmaceuticals 
Term Loan B (02/22) 
Loan 
1M USD SOFR+   5.25 % 
 0.75% 
 10.68% 
2/22/2029 
 2,969,773  
 2,447,043  
 2,806,436 

Natgasoline LLC 
Chemicals, Plastics, & Rubber 
Term Loan 
Loan 
1M USD SOFR+   3.50 % 
 0.00% 
 8.94% 
11/14/2025 
 3,305,649  
 3,294,914  
 3,289,120 

National Mentor Holdings, Inc. 
Healthcare & Pharmaceuticals 
Term Loan 2/21 
Loan 
1M USD SOFR+   3.75 % 
 0.75% 
 9.18% 
3/2/2028 
 2,708,195  
 2,701,639  
 2,522,007 

National Mentor Holdings, Inc. 
Healthcare & Pharmaceuticals 
Term Loan C 2/21 
Loan 
3M USD SOFR+   3.75 % 
 0.75% 
 9.20% 
3/2/2028 
 87,464  
 87,200  
 81,450 

New Trojan Parent, Inc. (c) 
Consumer goods: Durable 
Term Loan 
Loan 
1M USD SOFR+   5.25 % 
 0.50% 
 10.69% 
1/6/2028 
 -  
 40,239  
 - 

Nexstar Broadcasting, Inc. (Mission Broadcasting) 
Media: Broadcasting & Subscription 
Term Loan 
Loan 
1M USD SOFR+   2.50 % 
 0.00% 
 7.94% 
9/18/2026 
 657,625  
 654,056  
 655,705 

Next Level Apparel, Inc. 
Retail 
Term Loan 
Loan 
1M USD SOFR+   7.50 % 
 1.00% 
 12.92% 
8/9/2026 
 2,605,709  
 2,579,219  
 2,019,425 

NortonLifeLock Inc. 
High Tech Industries 
Term Loan B 
Loan 
1M USD SOFR+   2.00 % 
 0.50% 
 7.43% 
9/12/2029 
 997,195  
 993,475  
 994,014 

Nouryon Finance B.V. 
Chemicals, Plastics, & Rubber 
Term Loan B 
Loan 
1M USD SOFR+   4.00 % 
 0.00% 
 9.42% 
4/3/2028 
 497,500  
 492,525  
 497,192 

Nouryon Finance B.V. 
Chemicals, Plastics, & Rubber 
Term Loan (05/23) 
Loan 
3M USD SOFR+   4.00 % 
 0.00% 
 9.42% 
4/3/2028 
 498,747  
 494,084  
 498,228 

Novae LLC 
Automotive 
Term Loan B 
Loan 
3M USD SOFR+   5.00 % 
 0.75% 
 10.52% 
12/22/2028 
 1,965,000  
 1,954,113  
 1,948,632 

 


S-19
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

Nuvei Technologies Corp. 
High Tech Industries 
Term Loan B 
Loan 
1M USD SOFR+   3.00 % 
 0.50% 
 8.43% 
12/19/2030 
 2,100,000  
 2,084,250  
 2,100,336 

Olaplex, Inc. 
Consumer goods: Non-durable 
Term Loan (2/22) 
Loan 
1M USD SOFR+   3.50 % 
 0.50% 
 8.93% 
2/23/2029 
 2,467,387  
 2,376,707  
 2,249,442 

Open Text Corporation 
High Tech Industries 
Term Loan B (08/23) 
Loan 
1M USD SOFR+   2.75 % 
 0.50% 
 8.18% 
1/31/2030 
 1,380,397  
 1,343,151  
 1,381,267 

Organon & Co. 
Healthcare & Pharmaceuticals 
Term Loan USD 
Loan 
1M USD SOFR+   3.00 % 
 0.50% 
 8.43% 
6/2/2028 
 2,118,750  
 2,112,577  
 2,120,085 

Oxbow Carbon, LLC 
Metals & Mining 
Term Loan B (04/23) 
Loan 
1M USD SOFR+   4.00 % 
 0.50% 
 9.43% 
5/2/2030 
 497,500  
 488,294  
 496,669 

PACIFIC DENTAL SERVICES, LLC 
Healthcare & Pharmaceuticals 
Term Loan 
Loan 
1M USD SOFR+   3.50 % 
 0.75% 
 8.94% 
4/21/2028 
 895,408  
 894,474  
 893,734 

Pacific Gas & Electric 
Utilities: Electric 
Term Loan 
Loan 
1M USD SOFR+   2.50 % 
 0.50% 
 7.83% 
6/23/2027 
 250,000  
 248,893  
 249,923 

PACTIV EVERGREEN GROUP HOLDINGS INC. 
Containers, Packaging & Glass 
Term Loan B 
Loan 
1M USD SOFR+   3.25 % 
 0.50% 
 8.69% 
9/20/2028 
 975,000  
 971,827  
 975,994 

Padagis LLC 
Healthcare & Pharmaceuticals 
Term Loan 
Loan 
3M USD SOFR+   4.75 % 
 0.50% 
 10.34% 
7/6/2028 
 941,176  
 934,588  
 896,471 

PAR PETROLEUM LLC 
Energy: Oil & Gas 
Term Loan 2/23 
Loan 
3M USD SOFR+   4.25 % 
 0.50% 
 9.69% 
2/27/2030 
 2,483,737  
 2,460,184  
 2,482,198 

PATAGONIA HOLDCO LLC 
Telecommunications 
Term Loan B 
Loan 
3M USD SOFR+   5.75 % 
 0.50% 
 11.06% 
8/1/2029 
 1,975,000  
 1,671,950  
 1,816,013 

Pathway Partners Vet Management Company LLC 
Services: Business 
Term Loan 
Loan 
1M USD SOFR+   3.75 % 
 0.00% 
 9.19% 
3/30/2027 
 481,544  
 475,840  
 411,321 

PCI Gaming Authority 
Hotel, Gaming & Leisure 
Term Loan 
Loan 
1M USD SOFR+   2.50 % 
 0.00% 
 7.94% 
5/29/2026 
 794,490  
 793,022  
 794,156 

PEARLS (Netherlands) Bidco B.V. 
Chemicals, Plastics, & Rubber 
USD Term Loan (02/22) 
Loan 
3M USD SOFR+   3.75 % 
 0.50% 
 9.06% 
2/28/2029 
 982,500  
 981,042  
 972,066 

PEDIATRIC ASSOCIATES HOLDING COMPANY, LLC 
Healthcare & Pharmaceuticals 
Term Loan (12/22) 
Loan 
1M USD SOFR+   3.25 % 
 0.50% 
 8.69% 
12/29/2028 
 1,474,639  
 1,470,327  
 1,325,332 

Penn National Gaming, Inc 
Hotel, Gaming & Leisure 
Term Loan B 
Loan 
1M USD SOFR+   2.75 % 
 0.50% 
 8.18% 
5/3/2029 
 985,000  
 981,209  
 979,720 

Peraton Corp. 
Aerospace & Defense 
Term Loan B 
Loan 
1M USD SOFR+   3.75 % 
 0.75% 
 9.18% 
2/1/2028 
 5,236,340  
 5,225,013  
 5,236,340 

PHYSICIAN PARTNERS, LLC 
Healthcare & Pharmaceuticals 
Term Loan 
Loan 
3M USD SOFR+   4.00 % 
 0.50% 
 9.46% 
12/23/2028 
 2,958,680  
 2,899,926  
 2,608,254 

 


S-20
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

Pitney Bowes Inc 
Services: Business 
Term Loan B 
Loan 
1M USD SOFR+   4.00 % 
 0.00% 
 9.44% 
3/17/2028 
 3,899,823  
 3,878,054  
 3,880,324 

Plastipak Holdings Inc. 
Containers, Packaging & Glass 
Term Loan B (11/21) 
Loan 
1M USD SOFR+   2.50 % 
 0.50% 
 7.93% 
12/1/2028 
 1,795,294  
 1,789,191  
 1,791,309 

Playtika Holding Corp. 
High Tech Industries 
Term Loan B (3/21) 
Loan 
1M USD SOFR+   2.75 % 
 0.00% 
 8.19% 
3/13/2028 
 4,376,250  
 4,370,414  
 4,362,377 

PMHC II, INC. 
Chemicals, Plastics, & Rubber 
Term Loan (02/22) 
Loan 
3M USD SOFR+   4.25 % 
 0.50% 
 9.72% 
4/21/2029 
 1,975,000  
 1,967,432  
 1,926,968 

PointClickCare Technologies, Inc. 
High Tech Industries 
Term Loan B 
Loan 
3M USD SOFR+   3.00 % 
 0.75% 
 8.61% 
12/29/2027 
 486,250  
 484,831  
 485,642 

Polymer Process Holdings, Inc. 
Containers, Packaging & Glass 
Term Loan 
Loan 
1M USD SOFR+   4.75 % 
 0.75% 
 10.19% 
2/12/2028 
 5,348,750  
 5,313,507  
 5,071,310 

Pre-Paid Legal Services, Inc. 
Services: Consumer 
Term Loan (12/21) 
Loan 
1M USD SOFR+   3.75 % 
 0.50% 
 9.19% 
12/15/2028 
 2,947,500  
 2,929,343  
 2,939,512 

Presidio, Inc. 
Services: Business 
Term Loan B (1/20) 
Loan 
3M USD SOFR+   3.50 % 
 0.00% 
 8.91% 
1/22/2027 
 482,500  
 482,164  
 483,103 

Prime Security Services Borrower, LLC (ADT) 
Services: Consumer 
Term Loan B (10/23) 
Loan 
3M USD SOFR+   2.50 % 
 0.00% 
 7.83% 
10/11/2030 
 2,000,000  
 1,980,728  
 1,998,300 

PRIORITY HOLDINGS, LLC 
Services: Consumer 
Term Loan 
Loan 
1M USD SOFR+   5.75 % 
 1.00% 
 11.19% 
4/27/2027 
 2,925,000  
 2,906,770  
 2,921,344 

PriSo Acquisition Corporation 
Construction & Building 
Term Loan (01/21) 
Loan 
3M USD SOFR+   3.25 % 
 0.75% 
 8.84% 
12/28/2027 
 486,242  
 484,862  
 472,311 

Project Leopard Holdings, Inc. (NEW) 
High Tech Industries 
Term Loan B (06/22) 
Loan 
3M USD SOFR+   5.25 % 
 0.50% 
 10.66% 
7/20/2029 
 990,000  
 931,883  
 907,711 

Propulsion (BC) Finco 
Aerospace & Defense 
Term Loan 
Loan 
3M USD SOFR+   3.75 % 
 0.50% 
 9.10% 
9/14/2029 
 750,000  
 742,504  
 748,748 

PUG LLC 
Services: Consumer 
Term Loan B (02/20) 
Loan 
1M USD SOFR+   3.50 % 
 0.00% 
 8.94% 
2/12/2027 
 475,176  
 474,168  
 466,010 

Quartz AcquireCo, LLC 
High Tech Industries 
Term Loan B 
Loan 
1M USD SOFR+   3.50 % 
 0.00% 
 8.83% 
6/28/2030 
 997,500  
 988,167  
 996,253 

QUEST BORROWER LIMITED 
High Tech Industries 
Term Loan (1/22) 
Loan 
3M USD SOFR+   4.25 % 
 0.50% 
 9.71% 
2/1/2029 
 1,970,000  
 1,954,941  
 1,552,734 

R1 RCM INC. 
Healthcare & Pharmaceuticals 
Term Loan (12/23) 
Loan 
1M USD SOFR+   3.00 % 
 0.00% 
 8.36% 
6/21/2029 
 1,200,000  
 1,185,480  
 1,200,000 

R1 RCM INC. 
Healthcare & Pharmaceuticals 
Term Loan 
Loan 
1M USD SOFR+   3.00 % 
 0.50% 
 8.33% 
6/21/2029 
 1,200,000  
 1,185,733  
 1,200,000 

Rackspace Technology Global, Inc. 
High Tech Industries 
Term Loan (1/21) 
Loan 
1M USD SOFR+   2.75 % 
 0.75% 
 8.19% 
2/15/2028 
 2,944,353  
 2,869,199  
 1,278,173 

RAND PARENT LLC 
Transportation: Cargo 
Term Loan B 
Loan 
3M USD SOFR+   4.25 % 
 0.00% 
 9.60% 
3/16/2030 
 2,481,250  
 2,400,653  
 2,476,213 

 


S-21
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

RealPage, Inc. 
High Tech Industries 
Term Loan (04/21) 
Loan 
1M USD SOFR+   3.00 % 
 0.50% 
 8.44% 
4/24/2028 
 977,500  
 976,326  
 950,501 

Rent-A-Center, Inc. 
Retail 
Term Loan B2 (9/21) 
Loan 
6M USD SOFR+   3.25 % 
 0.50% 
 9.12% 
2/17/2028 
 1,860,192  
 1,827,856  
 1,856,323 

Research Now Group, Inc 
Media: Advertising, Printing & Publishing 
Term Loan 
Loan 
3M USD SOFR+   5.50 % 
 1.00% 
 11.07% 
12/20/2024 
 4,252,891  
 4,231,426  
 2,426,275 

Resideo Funding Inc. 
Services: Consumer 
Term Loan (1/21) 
Loan 
1M USD SOFR+   2.25 % 
 0.50% 
 7.69% 
2/11/2028 
 1,458,750  
 1,457,581  
 1,454,651 

Resolute Investment Managers (American Beacon), Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan (12/23) 
Loan 
3M USD SOFR+   6.50 % 
 1.00% 
 12.11% 
4/30/2027 
 1,968,154  
 1,968,154  
 1,936,172 

Restoration Hardware, Inc. 
Retail 
Term Loan (9/21) 
Loan 
1M USD SOFR+   2.50 % 
 0.50% 
 7.94% 
10/20/2028 
 3,427,375  
 3,422,882  
 3,328,838 

Reynolds Consumer Products LLC 
Containers, Packaging & Glass 
Term Loan 
Loan 
1M USD SOFR+   1.75 % 
 0.00% 
 7.18% 
1/29/2027 
 1,117,917  
 1,117,917  
 1,117,078 

Reynolds Group Holdings Inc. 
Containers, Packaging & Glass 
Term Loan B2 
Loan 
1M USD SOFR+   3.25 % 
 0.00% 
 8.69% 
2/5/2026 
 1,933,578  
 1,929,763  
 1,936,692 

Russell Investments US Inst’l Holdco, Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan (10/20) 
Loan 
1M USD SOFR+   3.50 % 
 1.00% 
 8.93% 
6/2/2025 
 5,503,217  
 5,487,956  
 5,313,356 

RV Retailer LLC 
Automotive 
Term Loan 
Loan 
1M USD SOFR+   3.75 % 
 0.75% 
 9.17% 
2/8/2028 
 2,927,756  
 2,890,768  
 2,728,317 

Ryan Specialty Group LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan 
Loan 
1M USD SOFR+   2.75 % 
 0.75% 
 8.08% 
9/1/2027 
 1,463,497  
 1,454,416  
 1,463,497 

S&S HOLDINGS LLC 
Services: Business 
Term Loan 
Loan 
3M USD SOFR+   5.00 % 
 0.50% 
 10.42% 
3/10/2028 
 2,433,693  
 2,393,141  
 2,405,560 

Sally Holdings LLC 
Retail 
Term Loan B 
Loan 
1M USD SOFR+   2.25 % 
 0.00% 
 7.58% 
2/28/2030 
 496,250  
 492,943  
 495,421 

Schweitzer-Mauduit International, Inc. 
High Tech Industries 
Term Loan B 
Loan 
1M USD SOFR+   3.75 % 
 0.75% 
 9.19% 
4/20/2028 
 1,297,546  
 1,293,069  
 1,294,847 

Scientific Games Holdings LP 
Hotel, Gaming & Leisure 
Term Loan B 
Loan 
3M USD SOFR+   3.25 % 
 0.50% 
 8.58% 
4/4/2029 
 493,750  
 492,933  
 492,516 

Sedgwick Claims Management Services, Inc. 
Services: Business 
Term Loan B 2/23 
Loan 
1M USD SOFR+   3.75 % 
 0.00% 
 9.08% 
2/17/2028 
 992,500  
 984,017  
 993,294 

SETANTA AIRCRAFT LEASING DAC 
Aerospace & Defense 
Term Loan 
Loan 
3M USD SOFR+   2.00 % 
 0.00% 
 7.61% 
11/2/2028 
 1,000,000  
 998,338  
 1,000,560 

Sitel Worldwide Corporation 
Services: Business 
USD Term Loan (7/21) 
Loan 
1M USD SOFR+   3.75 % 
 0.50% 
 9.19% 
8/28/2028 
 1,955,000  
 1,948,734  
 1,873,144 

 


S-22
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

SiteOne Landscape Supply, LLC 
Services: Business 
Term Loan (3/21) 
Loan 
1M USD SOFR+   2.00 % 
 0.50% 
 7.44% 
3/18/2028 
 1,267,378  
 1,261,906  
 1,267,378 

SMG US Midco 2, Inc. 
Services: Business 
Term Loan (01/20) 
Loan 
3M USD SOFR+   2.50 % 
 0.00% 
 8.07% 
1/23/2025 
 480,000  
 480,000  
 479,702 

Smyrna Ready Mix Concrete, LLC 
Construction & Building 
Term Loan B 
Loan 
1M USD SOFR+   3.50 % 
 0.00% 
 8.82% 
4/1/2029 
 514,217  
 510,811  
 514,860 

Sotheby’s 
Services: Business 
Term Loan (7/21) 
Loan 
3M USD SOFR+   4.50 % 
 0.50% 
 10.08% 
1/15/2027 
 3,191,015  
 3,159,783  
 3,159,903 

Sparta U.S. HoldCo LLC 
Chemicals, Plastics, & Rubber 
Term Loan (04/21) 
Loan 
1M USD SOFR+   3.25 % 
 0.75% 
 8.69% 
8/2/2028 
 1,960,000  
 1,953,602  
 1,955,453 

Specialty Pharma III Inc. 
Services: Business 
Term Loan 
Loan 
1M USD SOFR+   4.25 % 
 0.75% 
 9.68% 
3/31/2028 
 1,955,000  
 1,942,520  
 1,857,250 

Spin Holdco, Inc. 
Services: Consumer 
Term Loan 3/21 
Loan 
3M USD SOFR+   4.00 % 
 0.75% 
 9.62% 
3/4/2028 
 2,917,500  
 2,907,433  
 2,644,510 

SRAM, LLC 
Consumer goods: Durable 
Term Loan (05/21) 
Loan 
1M USD SOFR+   2.75 % 
 0.50% 
 8.19% 
5/12/2028 
 2,523,636  
 2,521,215  
 2,517,327 

STANDARD INDUSTRIES INC. 
Construction & Building 
Term Loan B 
Loan 
1M USD SOFR+   2.25 % 
 0.50% 
 7.68% 
9/22/2028 
 620,250  
 616,132  
 619,785 

Staples, Inc. 
Wholesale 
Term Loan (03/19) 
Loan 
1M USD SOFR+   5.00 % 
 0.00% 
 10.44% 
4/16/2026 
 4,296,252  
 4,227,884  
 4,185,881 

Star Parent, Inc. 
Services: Business 
Term Loan B (09/23) 
Loan 
3M USD SOFR+   4.00 % 
 0.00% 
 9.35% 
9/19/2030 
 1,250,000  
 1,232,293  
 1,233,600 

Storable, Inc 
High Tech Industries 
Term Loan B 
Loan 
1M USD SOFR+   3.50 % 
 0.50% 
 8.83% 
4/17/2028 
 490,000  
 489,451  
 489,084 

Superannuation & Investments US LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan 
Loan 
1M USD SOFR+   3.75 % 
 0.50% 
 9.19% 
12/1/2028 
 980,000  
 972,893  
 979,510 

Sweetwater Borrower, LLC 
Retail 
Term Loan (8/21) 
Loan 
1M USD SOFR+   4.25 % 
 0.75% 
 9.69% 
8/2/2028 
 2,197,331  
 2,118,286  
 2,186,345 

Syncsort Incorporated 
High Tech Industries 
Term Loan B (10/21) 
Loan 
3M USD SOFR+   4.00 % 
 0.75% 
 9.59% 
4/24/2028 
 2,444,975  
 2,444,257  
 2,421,748 

Ta TT Buyer LLC 
Media: Broadcasting & Subscription 
Term Loan 3/22 
Loan 
3M USD SOFR+   5.00 % 
 0.50% 
 10.35% 
4/2/2029 
 987,475  
 979,563  
 987,060 

Tenable Holdings, Inc. 
Services: Business 
Term Loan B (6/21) 
Loan 
1M USD SOFR+   2.75 % 
 0.50% 
 8.19% 
7/7/2028 
 980,000  
 978,620  
 977,962 

Teneo Holdings LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan 
Loan 
1M USD SOFR+   5.25 % 
 1.00% 
 10.68% 
7/15/2025 
 4,337,912  
 4,305,238  
 4,332,490 

Ten-X, LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan 5/23 
Loan 
1M USD SOFR+   6.00 % 
 0.00% 
 11.33% 
5/25/2028 
 1,880,000  
 1,879,762  
 1,809,030 

The Dun & Bradstreet Corporation 
Services: Business 
Term Loan (01/24) 
Loan 
1M USD SOFR+   2.75 % 
 0.00% 
 8.07% 
1/18/2029 
 1,148,788  
 1,146,995  
 1,145,629 

 


S-23
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

Thor Industries, Inc. 
Automotive 
Term Loan B2 
Loan 
1M USD SOFR+ 2.75 % 
 0.00% 
 8.07% 
11/15/2030 
 847,276  
 839,124  
 847,276 

Torrid LLC 
Wholesale 
Term Loan 5/21 
Loan 
3M USD SOFR+ 5.50 % 
 0.75% 
 11.11% 
6/14/2028 
 3,293,297  
 2,885,799  
 2,766,369 

TORY BURCH LLC 
Retail 
Term Loan 
Loan 
1M USD SOFR+ 3.25 % 
 0.50% 
 8.69% 
4/15/2028 
 2,308,083  
 2,173,521  
 2,279,878 

Tosca Services, LLC 
Containers, Packaging & Glass 
Term Loan (2/21) 
Loan 
3M USD SOFR+ 3.50 % 
 0.75% 
 9.07% 
8/18/2027 
 485,000  
 481,026  
 403,360 

Trans Union LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan B7 (02/24) 
Loan 
1M USD SOFR+ 2.00 % 
 0.50% 
 7.33% 
12/1/2028 
 609,032  
 608,154  
 608,161 

Transdigm, Inc. 
Aerospace & Defense 
Term Loan H 
Loan 
3M USD SOFR+ 3.25 % 
 0.00% 
 8.60% 
2/22/2027 
 1,973,436  
 1,970,279  
 1,977,580 

TRITON WATER HOLDINGS, INC. 
Beverage, Food & Tobacco 
Term Loan (03/21) 
Loan 
3M USD SOFR+ 3.25 % 
 0.50% 
 8.86% 
3/31/2028 
 1,462,504  
 1,457,793  
 1,435,389 

Tronox Finance LLC 
Chemicals, Plastics, & Rubber 
Term Loan 
Loan 
1M USD SOFR+ 2.50 % 
 0.00% 
 7.94% 
3/10/2028 
 346,923  
 346,548  
 345,584 

Tronox Finance LLC 
Chemicals, Plastics, & Rubber 
Incremental Term Loan 
Loan 
3M USD SOFR+ 3.50 % 
 0.50% 
 8.85% 
8/11/2028 
 2,000,000  
 1,981,659  
 1,997,500 

TruGreen Limited Partnership 
Services: Consumer 
Term Loan 
Loan 
1M USD SOFR+ 4.00 % 
 0.75% 
 9.43% 
10/29/2027 
 944,761  
 940,433  
 912,034 

Uber Technologies, Inc. 
Transportation: Consumer 
Term Loan 2/23 
Loan 
3M USD SOFR+ 2.75 % 
 0.00% 
 8.13% 
3/3/2030 
 395,438  
 394,559  
 396,284 

Ultra Clean Holdings, Inc. 
High Tech Industries 
Incremental Term Loan 3/21 
Loan 
1M USD SOFR+ 3.75 % 
 0.00% 
 9.19% 
8/27/2025 
 763,480  
 761,941  
 764,755 

Unimin Corporation 
Metals & Mining 
Term Loan (12/20) 
Loan 
3M USD SOFR+ 4.00 % 
 1.00% 
 9.59% 
7/31/2026 
 496,815  
 481,603  
 494,207 

United Natural Foods, Inc 
Beverage, Food & Tobacco 
Term Loan B 
Loan 
1M USD SOFR+ 3.25 % 
 0.00% 
 8.69% 
10/22/2025 
 1,241,834  
 1,218,443  
 1,239,922 

Univision Communications Inc. 
Media: Broadcasting & Subscription 
Term Loan B (6/21) 
Loan 
1M USD SOFR+ 3.25 % 
 0.75% 
 8.69% 
3/15/2026 
 2,421,809  
 2,418,336  
 2,418,031 

Univision Communications Inc. 
Media: Broadcasting & Subscription 
Term Loan B (6/22) 
Loan 
3M USD SOFR+ 4.25 % 
 0.50% 
 9.60% 
6/25/2029 
 246,250  
 240,243  
 246,250 

Utz Quality Foods, LLC 
Beverage, Food & Tobacco 
Term Loan B 
Loan 
1M USD SOFR+ 3.00 % 
 0.00% 
 8.44% 
1/20/2028 
 1,478,977  
 1,478,749  
 1,478,252 

Vaco Holdings, LLC 
Services: Business 
Term Loan (01/22) 
Loan 
6M USD SOFR+ 5.00 % 
 0.75% 
 10.43% 
1/19/2029 
 2,318,552  
 2,260,590  
 2,287,251 

 


S-24
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

Vericast Corp. (c) 
Media: Advertising, Printing & Publishing 
Term Loan (12/23) 
Loan 
3M USD SOFR+   7.75 % 
 0.00% 
 13.36% 
6/16/2026 
 1,208,512  
 1,207,739  
 1,111,831 

Verifone Systems, Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan (7/18) 
Loan 
3M USD SOFR+   4.00 % 
 0.00% 
 9.59% 
8/20/2025 
 1,353,744  
 1,351,272  
 1,170,988 

Vertex Aerospace Services Corp 
Aerospace & Defense 
Term Loan (10/21) 
Loan 
1M USD SOFR+   3.25 % 
 0.75% 
 8.68% 
12/6/2028 
 982,538  
 979,566  
 982,459 

VFH Parent LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan (01/22) 
Loan 
1M USD SOFR+   3.00 % 
 0.50% 
 8.43% 
1/12/2029 
 2,975,130  
 2,970,557  
 2,970,667 

Viasat Inc 
Telecommunications 
Term Loan (2/22) 
Loan 
1M USD SOFR+   4.50 % 
 0.50% 
 9.83% 
3/5/2029 
 2,967,381  
 2,908,179  
 2,909,903 

Virtus Investment Partners, Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan B (9/21) 
Loan 
1M USD SOFR+   2.25 % 
 0.00% 
 7.69% 
9/28/2028 
 2,823,409  
 2,817,201  
 2,819,880 

Vistra Operations Company LLC 
Energy: Electricity 
2018 Incremental Term Loan 
Loan 
1M USD SOFR+   2.00 % 
 0.00% 
 7.33% 
12/20/2030 
 1,889,393  
 1,880,083  
 1,880,135 

Vizient, Inc 
Healthcare & Pharmaceuticals 
Term Loan 4/22 
Loan 
1M USD SOFR+   2.25 % 
 0.50% 
 7.68% 
5/16/2029 
 492,500  
 488,534  
 492,731 

VM Consolidated, Inc. 
Construction & Building 
Term Loan B (01/24) 
Loan 
1M USD SOFR+   2.75 % 
 0.00% 
 8.08% 
3/24/2028 
 1,841,374  
 1,840,186  
 1,843,676 

Vouvray US Finance LLC 
High Tech Industries 
Term Loan 
Loan 
1M USD SOFR+   6.00 % 
 1.00% 
 11.33% 
9/30/2025 
 466,250  
 466,250  
 472,078 

Walker & Dunlop, Inc. 
Banking, Finance, Insurance & Real Estate 
Term Loan B (12/22) 
Loan 
1M USD SOFR+   3.00 % 
 0.50% 
 8.43% 
12/15/2028 
 496,250  
 487,839  
 495,009 

Warner Music Group Corp. (WMG Acquisition Corp.) 
Hotel, Gaming & Leisure 
First Lien TL I (01/24) 
Loan 
1M USD SOFR+   2.00 % 
 0.00% 
 7.33% 
1/24/2031 
 1,250,000  
 1,249,906  
 1,247,463 

Watlow Electric Manufacturing Company 
High Tech Industries 
Term Loan B 
Loan 
3M USD SOFR+   3.75 % 
 0.50% 
 9.33% 
3/2/2028 
 2,831,632  
 2,822,010  
 2,826,337 

WeddingWire, Inc. 
Services: Consumer 
Term Loan (09/23) 
Loan 
1M USD SOFR+   4.50 % 
 0.00% 
 9.82% 
1/29/2028 
 4,808,923  
 4,806,669  
 4,784,879 

WEX Inc. 
Services: Business 
Term Loan 
Loan 
1M USD SOFR+   2.00 % 
 0.00% 
 7.33% 
3/31/2028 
 2,924,849  
 2,918,448  
 2,919,379 

WildBrain Ltd. 
Media: Diversified & Production 
Term Loan 
Loan 
1M USD SOFR+   4.25 % 
 0.75% 
 9.69% 
3/27/2028 
 3,005,025  
 2,952,048  
 2,899,849 

Windsor Holdings III, LLC 
Chemicals, Plastics, & Rubber 
Term Loan 
Loan 
1M USD SOFR+   4.50 % 
 0.00% 
 9.82% 
8/1/2030 
 500,000  
 500,000  
 500,390 

Wyndham Hotels & Resorts, Inc. 
Hotel, Gaming & Leisure 
Term Loan  5/23 
Loan 
1M USD SOFR+   2.25 % 
 0.00% 
 7.68% 
5/24/2030 
 995,000  
 990,380  
 996,124 

 


S-25
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments
February 29, 2024
 


Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/
    Spread 
SOFR/
    LIBOR Floor  
Current
    Rate
    (All In)  
Maturity
    Date 
Principal/
    Number
    of Shares  
Cost  
Fair
    Value 

Xperi Corporation 
High Tech Industries 
Term Loan 
Loan 
1M USD SOFR+   3.50 % 
 0.00% 
 8.94% 
6/8/2028 
 1,983,094  
 1,979,717  
 1,977,303 

Zayo Group, LLC 
Telecommunications 
Term Loan 4/22 
Loan 
1M USD SOFR+   4.25 % 
 0.50% 
 9.65% 
3/9/2027 
 982,500  
 965,514  
 884,555 

ZEBRA BUYER (Allspring) LLC 
Banking, Finance, Insurance & Real Estate 
Term Loan 4/21 
Loan 
3M USD SOFR+   3.25 % 
 0.50% 
 8.89% 
11/1/2028 
 1,866,509  
 1,857,862  
 1,862,142 

Zekelman Industries, Inc. 
Metals & Mining 
Term Loan (01/20) 
Loan 
1M USD SOFR+   2.00 % 
 0.00% 
 7.44% 
1/25/2027 
 954,029  
 954,029  
 953,733 

Zest Acquisition Corp. 
Healthcare & Pharmaceuticals 
Term Loan (1/23) 
Loan 
1M USD SOFR+   5.50 % 
 0.00% 
 10.83% 
2/8/2028 
 1,980,000  
 1,897,656  
 1,940,400 

Zodiac Pool Solutions 
Consumer goods: Durable 
Term Loan (1/22) 
Loan 
1M USD SOFR+   1.93 % 
 0.50% 
 7.35% 
1/29/2029 
 490,000  
 489,237  
 488,772 

TOTAL INVESTMENTS 
  
  
  
  
    
    
  
    
$630,995,710  
$607,551,774 

 


  
Number of Shares  
Cost  
Fair Value 

Cash and cash equivalents 
   
   
  

U.S. Bank Money Market (a) 
 12,104,832  
$12,104,832  
$12,104,832 

Total cash and cash equivalents 
 12,104,832  
$12,104,832  
$12,104,832 

 

 


(a)Included within cash and cash equivalents in Saratoga CLO’s
Statements of Assets and Liabilities as of February 29, 2024.

(b)As of February 29, 2024, the investment was in default and on non-accrual
status.


(c)Investments include Payment-in-Kind Interest.

 
LIBOR - London Interbank Offered Rate
SOFR - Secured Overnight Financing Rate
 
1M USD LIBOR - The 1-month USD LIBOR rate as of February 29, 2024
was 5.44%.
3M USD LIBOR - The 3-month USD LIBOR rate as of February 29, 2024
was 5.60%.
1M SOFR - The 1-month SOFR rate as of February 29, 2024 was 5.32%.
3M SOFR - The 3-month SOFR rate as of February 29, 2024 was 5.33%.
6M SOFR - The 6-month SOFR rate as of February 29, 2024 was 5.27%.
 
Prime - The Prime Rate as
of February 29, 2024 was 8.50%.
 
See accompanying notes to financial statements.
 


S-26
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments

February 28, 2023
 



Issuer
    Name 
Industry 
Asset
    Name 
Asset
     Type 
Reference
    Rate/Spread 
SOFR/
    LIBOR
    Floor  
Current
    Rate (All In)  
Maturity
    Date 
Principal/
    Number of Shares  
Cost  
Fair
    Value 

19TH
    HOLDINGS GOLF, LLC 
Consumer
    goods: Durable 
Term
    Loan 
Loan 
1M
    USD SOFR+ 3.00 % 
 0.50% 
 7.67% 
2/7/2029 
$1,997,500  
$1,924,905  
$1,901,380 

888
    Acquisitions Limited 
Hotel,
    Gaming & Leisure 
Term
    Loan B 
Loan 
3M
    USD SOFR+ 5.25 % 
 0.00% 
 9.93% 
7/8/2028 
 2,494,565  
 2,143,085  
 2,126,617 

ADMI
    Corp. 
Healthcare
    & Pharmaceuticals 
Term
    Loan B 
Loan 
1M
    USD LIBOR+ 3.00 % 
 0.00% 
 7.63% 
4/30/2025 
 1,910,276  
 1,907,516  
 1,825,517 

Adtalem
    Global Education Inc. 
Services:
    Business 
Term
    Loan B (02/21) 
Loan 
1M
    USD LIBOR+ 4.00 % 
 0.75% 
 8.63% 
8/11/2028 
 691,846  
 686,475  
 689,992 

Aegis
    Sciences Corporation 
Healthcare
    & Pharmaceuticals 
Term
    Loan 
Loan 
3M
    USD LIBOR+ 5.50 % 
 1.00% 
 10.36% 
5/9/2025 
 2,349,601  
 2,341,307  
 2,268,540 

Agiliti
    Health Inc. 
Healthcare
    & Pharmaceuticals 
Term
    Loan (09/20) 
Loan 
1M
    USD LIBOR+ 2.75 % 
 0.75% 
 7.38% 
1/4/2026 
 214,286  
 213,103  
 212,946 

Agiliti
    Health Inc. 
Healthcare
    & Pharmaceuticals 
Term
    Loan (1/19) 
Loan 
1M
    USD LIBOR+ 2.75 % 
 0.00% 
 7.38% 
1/4/2026 
 1,468,430  
 1,463,378  
 1,457,416 

AHEAD
    DB Holdings, LLC 
Services:
    Business 
Term
    Loan (04/21) 
Loan 
3M
    USD LIBOR+ 3.75 % 
 0.75% 
 8.48% 
10/18/2027 
 2,955,000  
 2,871,299  
 2,915,285 

AI
    Convoy (Luxembourg) S.a.r.l. 
Aerospace
    & Defense 
Term
    Loan B (USD) 
Loan 
6M
    USD LIBOR+ 3.50 % 
 1.00% 
 8.17% 
1/18/2027 
 -  
 -  
 - 

Air
    Canada 
Transportation:
    Consumer 
Term
    Loan B (07/21) 
Loan 
3M
    USD LIBOR+ 3.50 % 
 0.75% 
 8.37% 
8/11/2028 
 1,990,000  
 1,851,613  
 1,984,408 

AIS
    HoldCo, LLC 
Services:
    Business 
Term
    Loan 
Loan 
3M
    USD LIBOR+ 5.00 % 
 0.00% 
 9.83% 
8/15/2025 
 4,789,642  
 4,700,517  
 4,622,004 

AIT
    Worldwide Logistics Holdings, Inc. 
Transportation:
    Cargo 
Term
    Loan (04/21) 
Loan 
1M
    USD LIBOR+ 4.75 % 
 0.75% 
 9.33% 
4/6/2028 
 2,500,000  
 2,333,827  
 2,407,300 

AL
    GCX Holdings (Arclight) T/L B 
Energy:
    Oil & Gas 
Term
    Loan B 
Loan 
3M
    USD SOFR+ 3.50 % 
 0.50% 
 8.28% 
5/17/2029 
 976,802  
 971,918  
 975,581 

Alchemy
    US Holdco 1, LLC 
Metals
    & Mining 
Term
    Loan 
Loan 
1M
    USD LIBOR+ 5.50 % 
 0.00% 
 5.60% 
10/10/2025 
 1,654,803  
 1,644,633  
 1,551,378 

AlixPartners,
    LLP 
Banking,
    Finance, Insurance & Real Estate 
Term
    Loan B (01/21) 
Loan 
1M
    USD LIBOR+ 2.75 % 
 0.50% 
 7.38% 
2/4/2028 
 245,625  
 245,275  
 245,050 

Alkermes,
    Inc. 
Healthcare
    & Pharmaceuticals 
Term
    Loan B (3/21) 
Loan 
1M
    USD LIBOR+ 2.50 % 
 0.50% 
 7.11% 
3/12/2026 
 2,126,218  
 2,112,914  
 2,062,432 

Allen
    Media, LLC 
Media:
    Diversified & Production 
Term
    Loan (7/21) 
Loan 
3M
    USD SOFR+ 5.50 % 
 0.00% 
 10.23% 
2/10/2027 
 4,394,261  
 4,368,566  
 3,649,434 

Alliant
    Holdings Intermediate, LLC 
Banking,
    Finance, Insurance & Real Estate 
Term
    Loan B4 
Loan 
1M
    USD LIBOR+ 3.50 % 
 0.50% 
 8.09% 
11/5/2027 
 987,500  
 986,800  
 974,781 

Allied
    Universal Holdco LLC 
Services:
    Business 
Term
    Loan 4/21 
Loan 
1M
    USD SOFR+ 3.75 % 
 0.50% 
 8.47% 
5/12/2028 
 1,975,000  
 1,967,474  
 1,900,404 

Altisource
    Solutions S.a r.l. 
Banking,
    Finance, Insurance & Real Estate 
Term
    Loan B (03/18) 
Loan 
3M
    USD LIBOR+ 4.00 % 
 1.00% 
 8.73% 
4/3/2024 
 1,126,283  
 1,124,635  
 893,142 

Altium
    Packaging LLC 
Containers,
    Packaging & Glass 
Term
    Loan (01/21) 
Loan 
1M
    USD LIBOR+ 2.75 % 
 0.50% 
 7.38% 
1/29/2028 
 491,250  
 489,554  
 480,506 

American
    Airlines T/L (2/23) 
Transportation:
    Consumer 
Term
    Loan 
Loan 
N/A
    N/A 
 N/A  
 N/A  
N/A 
 -  
 27  
 - 

American
    Axle & Manufacturing Inc. 
Automotive 
Term
    Loan (12/22) 
Loan 
1M
    USD SOFR+ 3.50 % 
 0.50% 
 8.16% 
12/5/2029 
 500,000  
 485,367  
 499,000 

American
    Greetings Corporation 
Media:
    Advertising, Printing & Publishing 
Term
    Loan 
Loan 
1M
    USD LIBOR+ 4.50 % 
 1.00% 
 9.07% 
4/6/2024 
 3,012,861  
 3,011,462  
 3,011,596 

American
    Trailer World Corp 
Automotive 
Term
    Loan 
Loan 
1M
    USD SOFR+ 3.75 % 
 0.75% 
 8.47% 
3/3/2028 
 1,357,439  
 1,354,762  
 1,194,967 

AmWINS
    Group, LLC 
Banking,
    Finance, Insurance & Real Estate 
Term
    Loan 2/21 
Loan 
1M
    USD LIBOR+ 2.25 % 
 0.75% 
 6.88% 
2/17/2028 
 1,960,017  
 1,940,778  
 1,926,462 

 


S-27
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments

February 28, 2023
 



Issuer
    Name
 
Industry
 
Asset
    Name
 
Asset
    
    Type
 
Reference
    Rate/Spread
 
SOFR/
    LIBOR Floor
 
 
Current
    Rate (All In)
 
 
Maturity
    Date
 
Principal/
    Number of Shares
 
 
Cost
 
 
Fair
    Value
 

Anastasia
    Parent LLC
 
Consumer
    goods: Non-durable
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 3.75 %
 
 
0.00
%
 
 
8.48
%
 
8/11/2025
 
 
957,500
 
 
 
955,643
 
 
 
791,134
 

Anchor
    Glass Container Corporation
 
Containers,
    Packaging & Glass
 
Term
    Loan (07/17)
 
Loan
 
3M
    USD LIBOR+ 2.75 %
 
 
1.00
%
 
 
7.48
%
 
12/7/2023
 
 
470,138
 
 
 
469,901
 
 
 
333,915
 

Anchor
    Packaging, LLC
 
Containers,
    Packaging & Glass
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 4.00 %
 
 
0.00
%
 
 
8.63
%
 
7/18/2026
 
 
977,215
 
 
 
971,052
 
 
 
952,785
 

ANI
    Pharmaceuticals, Inc.
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 6.00 %
 
 
0.75
%
 
 
10.63
%
 
11/19/2027
 
 
2,970,000
 
 
 
2,922,446
 
 
 
2,866,050
 

AP
    Core Holdings II LLC
 
High
    Tech Industries
 
Term
    Loan B1
 
Loan
 
1M
    USD LIBOR+ 5.50 %
 
 
0.75
%
 
 
10.13
%
 
9/1/2027
 
 
1,875,000
 
 
 
1,852,824
 
 
 
1,802,344
 

AP
    Core Holdings II LLC
 
High
    Tech Industries
 
Term
    Loan B2
 
Loan
 
1M
    USD LIBOR+ 5.50 %
 
 
0.75
%
 
 
10.13
%
 
9/1/2027
 
 
500,000
 
 
 
494,095
 
 
 
480,415
 

APEX
    GROUP TREASURY LLC
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan
 
Loan
 
3M
    USD SOFR+ 5.00 %
 
 
0.50
%
 
 
9.66
%
 
7/26/2028
 
 
500,000
 
 
 
468,464
 
 
 
497,500
 

APi
    Group DE, Inc. (J2 Acquisition)
 
Services:
    Business
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 2.50 %
 
 
0.00
%
 
 
7.13
%
 
10/1/2026
 
 
1,757,184
 
 
 
1,751,429
 
 
 
1,754,548
 

APLP
    Holdings Limited Partnership
 
Energy:
    Electricity
 
Term
    Loan B (3/21)
 
Loan
 
3M
    USD LIBOR+ 3.75 %
 
 
1.00
%
 
 
8.48
%
 
5/14/2027
 
 
440,541
 
 
 
437,327
 
 
 
440,726
 

Apollo
    Commercial Real Estate Finance, Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 2.75 %
 
 
0.00
%
 
 
7.38
%
 
5/15/2026
 
 
2,939,086
 
 
 
2,914,348
 
 
 
2,850,914
 

Apollo
    Commercial Real Estate Finance, Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B1 (2/21)
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.50
%
 
 
8.13
%
 
3/6/2028
 
 
982,500
 
 
 
975,109
 
 
 
928,463
 

AppLovin
    Corporation
 
High
    Tech Industries
 
Term
    Loan (10/21)
 
Loan
 
3M
    USD SOFR+ 3.10 %
 
 
0.50
%
 
 
7.70
%
 
10/21/2028
 
 
1,488,750
 
 
 
1,485,729
 
 
 
1,472,002
 

AppLovin
    Corporation
 
High
    Tech Industries
 
Term
    Loan B
 
Loan
 
3M
    USD SOFR+ 3.35 %
 
 
0.00
%
 
 
7.94
%
 
8/15/2025
 
 
979,592
 
 
 
979,592
 
 
 
972,245
 

Aramark
    Corporation
 
Services:
    Consumer
 
Term
    Loan B (4/21)
 
Loan
 
1M
    USD LIBOR+ 2.50 %
 
 
0.00
%
 
 
7.13
%
 
4/1/2028
 
 
1,753,715
 
 
 
1,747,448
 
 
 
1,747,139
 

Aramark
    Corporation
 
Services:
    Consumer
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 1.75 %
 
 
0.00
%
 
 
6.38
%
 
1/15/2027
 
 
2,331,250
 
 
 
2,280,733
 
 
 
2,305,023
 

ARC
    FALCON I INC.
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 3.75 %
 
 
0.50
%
 
 
8.38
%
 
9/23/2028
 
 
863,885
 
 
 
860,682
 
 
 
811,836
 

ARC
    FALCON I INC. (a)
 
Chemicals,
    Plastics, & Rubber
 
Delayed
    Draw Term Loan
 
Loan
 
3M
    USD LIBOR+ 1.00 %
 
 
0.50
%
 
 
1.00
%
 
9/29/2028
 
 
-
 
 
 
(512
)
 
 
(7,675
)

Arches
    Buyer Inc.
 
Services:
    Consumer
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 3.25 %
 
 
0.50
%
 
 
7.97
%
 
12/6/2027
 
 
1,484,848
 
 
 
1,477,106
 
 
 
1,395,758
 

Aretec
    Group, Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan (10/18)
 
Loan
 
1M
    USD SOFR+ 4.25 %
 
 
0.00
%
 
 
8.97
%
 
10/1/2025
 
 
1,916,203
 
 
 
1,913,228
 
 
 
1,887,460
 

ASP
    BLADE HOLDINGS, INC.
 
Capital
    Equipment
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 4.00 %
 
 
0.50
%
 
 
8.73
%
 
10/7/2028
 
 
99,059
 
 
 
98,658
 
 
 
82,491
 

Asplundh
    Tree Expert, LLC
 
Services:
    Business
 
Term
    Loan 2/21
 
Loan
 
1M
    USD LIBOR+ 1.75 %
 
 
0.00
%
 
 
6.38
%
 
9/7/2027
 
 
977,500
 
 
 
974,396
 
 
 
974,010
 

AssuredPartners
    Capital, Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B (2/20)
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.00
%
 
 
8.13
%
 
2/12/2027
 
 
989,796
 
 
 
986,847
 
 
 
967,773
 

AssuredPartners
    Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan
 
Loan
 
1M
    USD SOFR+ 3.50 %
 
 
0.50
%
 
 
8.12
%
 
2/12/2027
 
 
496,250
 
 
 
495,400
 
 
 
485,084
 

AssuredPartners
    Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Incremental
    Term Loan (7/21)
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.50
%
 
 
8.13
%
 
2/12/2027
 
 
985,000
 
 
 
985,000
 
 
 
962,838
 

ASTRO
    ONE ACQUISITION CORPORATION
 
Consumer
    goods: Durable
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 5.50 %
 
 
0.75
%
 
 
10.23
%
 
9/15/2028
 
 
2,970,000
 
 
 
2,946,187
 
 
 
1,767,150
 

Asurion,
    LLC
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B10
 
Loan
 
3M
    USD SOFR+ 4.00 %
 
 
0.00
%
 
 
8.68
%
 
8/19/2028
 
 
1,995,000
 
 
 
1,901,937
 
 
 
1,866,741
 

 


S-28
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments

February 28, 2023
 



Issuer
    Name
 
Industry
 
Asset
    Name
 
Asset
    
    Type
 
Reference
    Rate/Spread
 
SOFR/
    LIBOR Floor
 
 
Current
    Rate (All In)
 
 
Maturity
    Date
 
Principal/
    Number of Shares
 
 
Cost
 
 
Fair
    Value
 

Asurion,
    LLC
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B8
 
Loan
 
1M
    USD LIBOR+ 3.25 %
 
 
0.00
%
 
 
7.88
%
 
12/18/2026
 
 
2,964,858
 
 
 
2,956,667
 
 
 
2,817,683
 

ATHENAHEALTH
    GROUP INC.
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan B (2/22)
 
Loan
 
1M
    USD SOFR+ 3.50 %
 
 
0.50
%
 
 
8.06
%
 
2/15/2029
 
 
1,330,543
 
 
 
1,325,206
 
 
 
1,227,426
 

ATHENAHEALTH
    GROUP INC. (a)
 
Healthcare
    & Pharmaceuticals
 
Delayed
    Draw Term Loan (02/22)
 
Loan
 
3M
    USD LIBOR+ 3.50 %
 
 
0.50
%
 
 
3.50
%
 
2/15/2029
 
 
-
 
 
 
-
 
 
 
(12,636
)

Avison
    Young (Canada) Inc
 
Services:
    Business
 
Term
    Loan (08/22)
 
Loan
 
1M
    USD SOFR+ 7.00 %
 
 
0.00
%
 
 
11.73
%
 
1/31/2026
 
 
748,125
 
 
 
708,918
 
 
 
635,906
 

Avison
    Young (Canada) Inc
 
Services:
    Business
 
Term
    Loan
 
Loan
 
1M
    USD SOFR+ 5.75 %
 
 
0.00
%
 
 
10.48
%
 
1/31/2026
 
 
3,370,882
 
 
 
3,344,831
 
 
 
2,646,142
 

Avolon
    TLB Borrower 1 (US) LLC
 
Capital
    Equipment
 
Term
    Loan B5 (7/21)
 
Loan
 
1M
    USD LIBOR+ 2.25 %
 
 
0.50
%
 
 
6.85
%
 
12/1/2027
 
 
490,000
 
 
 
486,530
 
 
 
489,539
 

Avolon
    TLB Borrower 1 (US) LLC
 
Capital
    Equipment
 
Term
    Loan B3
 
Loan
 
1M
    USD LIBOR+ 1.75 %
 
 
0.75
%
 
 
6.35
%
 
1/15/2025
 
 
1,000,000
 
 
 
932,184
 
 
 
998,440
 

Axalta
    Coating Systems Dutch Holding B B.V.
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan B-4 Dollar
 
Loan
 
3M
    USD SOFR+ 3.00 %
 
 
0.50
%
 
 
7.51
%
 
12/7/2029
 
 
1,000,000
 
 
 
990,447
 
 
 
1,003,570
 

AZURITY
    PHARMACEUTICALS, INC.
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan B
 
Loan
 
3M
    USD LIBOR+ 6.00 %
 
 
0.75
%
 
 
10.75
%
 
9/20/2027
 
 
475,000
 
 
 
463,094
 
 
 
457,188
 

B&G
    Foods, Inc.
 
Beverage,
    Food & Tobacco
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 2.50 %
 
 
0.00
%
 
 
7.13
%
 
10/10/2026
 
 
642,295
 
 
 
638,890
 
 
 
613,391
 

B.C.
    Unlimited Liability Co (Burger King)
 
Beverage,
    Food & Tobacco
 
Term
    Loan B4
 
Loan
 
1M
    USD LIBOR+ 1.75 %
 
 
0.00
%
 
 
6.38
%
 
11/19/2026
 
 
1,455,000
 
 
 
1,430,342
 
 
 
1,440,712
 

BAKELITE
    UK INTERMEDIATE LTD.
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan
 
Loan
 
3M
    USD SOFR+ 4.00 %
 
 
0.50
%
 
 
8.73
%
 
5/29/2029
 
 
995,000
 
 
 
990,609
 
 
 
940,275
 

Baldwin
    Risk Partners, LLC
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.50
%
 
 
8.10
%
 
10/14/2027
 
 
1,226,325
 
 
 
1,215,617
 
 
 
1,205,637
 

Bausch
    Health Companies Inc.
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan B (1/22)
 
Loan
 
1M
    USD SOFR+ 5.25 %
 
 
0.50
%
 
 
9.91
%
 
2/1/2027
 
 
1,950,000
 
 
 
1,764,574
 
 
 
1,534,299
 

Belfor
    Holdings Inc.
 
Services:
    Consumer
 
Term
    Loan B-2 (3/22)
 
Loan
 
1M
    USD SOFR+ 4.25 %
 
 
0.50
%
 
 
8.87
%
 
4/6/2026
 
 
994,911
 
 
 
971,026
 
 
 
992,424
 

Belfor
    Holdings Inc.
 
Services:
    Consumer
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 4.00 %
 
 
0.00
%
 
 
8.63
%
 
4/6/2026
 
 
245,547
 
 
 
245,547
 
 
 
244,995
 

Belron
    Finance US LLC
 
Automotive
 
Term
    Loan B (3/21)
 
Loan
 
3M
    USD LIBOR+ 2.50 %
 
 
0.50
%
 
 
7.38
%
 
4/13/2028
 
 
1,965,000
 
 
 
1,950,181
 
 
 
1,960,913
 

Bengal
    Debt Merger Sub LLC
 
Beverage,
    Food & Tobacco
 
Term
    Loan
 
Loan
 
3M
    USD SOFR+ 3.25 %
 
 
0.50
%
 
 
7.93
%
 
1/24/2029
 
 
1,990,000
 
 
 
1,988,811
 
 
 
1,804,273
 

Blackstone
    Mortgage Trust, Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan (6/21)
 
Loan
 
1M
    USD LIBOR+ 2.75 %
 
 
0.50
%
 
 
7.38
%
 
4/23/2026
 
 
1,465,141
 
 
 
1,457,842
 
 
 
1,441,332
 

Blackstone
    Mortgage Trust, Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 2.25 %
 
 
0.00
%
 
 
6.88
%
 
4/23/2026
 
 
979,747
 
 
 
975,006
 
 
 
952,804
 

Blue
    Tree Holdings, Inc.
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan (2/21)
 
Loan
 
3M
    USD LIBOR+ 2.50 %
 
 
0.00
%
 
 
7.23
%
 
3/4/2028
 
 
982,500
 
 
 
980,692
 
 
 
967,763
 

Bombardier
    Recreational Products, Inc.
 
Consumer
    goods: Durable
 
Term
    Loan  12/22
 
Loan
 
1M
    USD SOFR+ 3.50 %
 
 
0.50
%
 
 
8.12
%
 
12/12/2029
 
 
498,750
 
 
 
486,572
 
 
 
496,007
 

Bombardier
    Recreational Products, Inc.
 
Consumer
    goods: Durable
 
Term
    Loan (1/20)
 
Loan
 
1M
    USD LIBOR+ 2.00 %
 
 
0.00
%
 
 
6.63
%
 
5/24/2027
 
 
1,455,049
 
 
 
1,449,140
 
 
 
1,416,854
 

Boxer
    Parent Company, Inc.
 
High
    Tech Industries
 
Term
    Loan (2/21)
 
Loan
 
1M
    USD LIBOR+ 3.75 %
 
 
0.00
%
 
 
8.38
%
 
10/2/2025
 
 
516,794
 
 
 
516,794
 
 
 
509,827
 

Bracket
    Intermediate Holding Corp
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 4.25 %
 
 
0.00
%
 
 
9.04
%
 
9/5/2025
 
 
957,500
 
 
 
955,597
 
 
 
929,378
 

BrightSpring
    Health Services (Phoenix Guarantor)
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan B-3
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.00
%
 
 
8.13
%
 
3/5/2026
 
 
982,500
 
 
 
982,500
 
 
 
967,556
 

 


S-29
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments

February 28, 2023
 



Issuer
    Name
 
Industry
 
Asset
    Name
 
Asset
    
    Type
 
Reference
    Rate/Spread
 
SOFR/
    LIBOR Floor
 
 
Current
    Rate (All In)
 
 
Maturity
    Date
 
Principal/
    Number of Shares
 
 
Cost
 
 
Fair
    Value
 

BroadStreet
    Partners, Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B3
 
Loan
 
1M
    USD LIBOR+ 3.00 %
 
 
0.00
%
 
 
7.63
%
 
1/22/2027
 
 
2,948,786
 
 
 
2,944,577
 
 
 
2,906,412
 

Brookfield
    WEC Holdings Inc.
 
Energy:
    Electricity
 
Term
    Loan (1/21)
 
Loan
 
1M
    USD LIBOR+ 2.75 %
 
 
0.50
%
 
 
7.38
%
 
8/1/2025
 
 
1,462,613
 
 
 
1,464,152
 
 
 
1,456,090
 

BROWN
    GROUP HOLDING, LLC
 
Aerospace
    & Defense
 
Term
    Loan B-2
 
Loan
 
1M
    USD SOFR+ 3.75 %
 
 
0.00
%
 
 
8.37
%
 
6/8/2029
 
 
498,750
 
 
 
487,209
 
 
 
498,336
 

Buckeye
    Partners, L.P.
 
Utilities:
    Oil & Gas
 
Term
    Loan (1/21)
 
Loan
 
1M
    USD LIBOR+ 2.25 %
 
 
0.00
%
 
 
6.82
%
 
11/1/2026
 
 
1,950,188
 
 
 
1,941,198
 
 
 
1,946,931
 

BW
    Gas & Convenience Holdings LLC
 
Beverage,
    Food & Tobacco
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.50
%
 
 
8.13
%
 
3/31/2028
 
 
2,462,500
 
 
 
2,443,814
 
 
 
2,437,875
 

Callaway
    Golf Company
 
Retail
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 4.50 %
 
 
0.00
%
 
 
9.13
%
 
1/4/2026
 
 
675,000
 
 
 
668,575
 
 
 
674,582
 

Camping
    World, Inc.
 
Retail
 
Term
    Loan B (5/21)
 
Loan
 
1M
    USD LIBOR+ 2.50 %
 
 
0.75
%
 
 
7.09
%
 
6/5/2028
 
 
2,487,342
 
 
 
2,268,038
 
 
 
2,208,560
 

CareerBuilder,
    LLC
 
Services:
    Business
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 6.75 %
 
 
1.00
%
 
 
11.48
%
 
7/31/2023
 
 
5,393,388
 
 
 
5,347,671
 
 
 
3,513,792
 

Castle
    US Holding Corporation
 
Media:
    Advertising, Printing & Publishing
 
Term
    Loan B (USD)
 
Loan
 
1M
    USD LIBOR+ 3.75 %
 
 
0.00
%
 
 
8.38
%
 
1/27/2027
 
 
1,963,384
 
 
 
1,954,023
 
 
 
1,375,469
 

CASTLELAKE
    AVIATION LLC
 
Aerospace
    & Defense
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 2.75 %
 
 
0.50
%
 
 
7.31
%
 
10/21/2027
 
 
1,000,000
 
 
 
992,500
 
 
 
987,080
 

CBI
    BUYER, INC.
 
Consumer
    goods: Durable
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 3.25 %
 
 
0.50
%
 
 
7.88
%
 
1/6/2028
 
 
2,969,887
 
 
 
2,814,181
 
 
 
2,026,948
 

CCC
    Intelligent Solutions Inc.
 
Services:
    Business
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 2.25 %
 
 
0.50
%
 
 
6.88
%
 
9/16/2028
 
 
247,500
 
 
 
247,017
 
 
 
244,612
 

CCI
    Buyer, Inc
 
Telecommunications
 
Term
    Loan
 
Loan
 
3M
    USD SOFR+ 4.00 %
 
 
0.75
%
 
 
8.58
%
 
12/17/2027
 
 
245,625
 
 
 
243,880
 
 
 
241,223
 

CCRR
    Parent, Inc.
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan
 
Loan
 
1M
    USD SOFR+ 4.25 %
 
 
0.50
%
 
 
8.97
%
 
3/5/2028
 
 
1,000,000
 
 
 
951,484
 
 
 
975,000
 

CCRR
    Parent, Inc.
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 3.75 %
 
 
0.75
%
 
 
8.39
%
 
3/5/2028
 
 
982,500
 
 
 
978,899
 
 
 
957,938
 

CCS-CMGC
    Holdings, Inc.
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 5.50 %
 
 
0.00
%
 
 
10.13
%
 
9/25/2025
 
 
2,400,000
 
 
 
2,390,330
 
 
 
1,605,504
 

CDK
    GLOBAL, INC.
 
High
    Tech Industries
 
Term
    Loan B
 
Loan
 
3M
    USD SOFR+ 4.50 %
 
 
0.50
%
 
 
9.08
%
 
7/6/2029
 
 
1,000,000
 
 
 
971,508
 
 
 
996,150
 

Cengage
    Learning, Inc.
 
Media:
    Advertising, Printing & Publishing
 
Term
    Loan B (6/21)
 
Loan
 
6M
    USD LIBOR+ 4.75 %
 
 
1.00
%
 
 
9.88
%
 
7/14/2026
 
 
2,962,500
 
 
 
2,942,124
 
 
 
2,794,171
 

CENTURI
    GROUP, INC.
 
Construction
    & Building
 
Term
    Loan B
 
Loan
 
3M
    USD LIBOR+ 2.50 %
 
 
0.50
%
 
 
7.45
%
 
8/27/2028
 
 
878,330
 
 
 
871,190
 
 
 
870,100
 

CenturyLink,
    Inc.
 
Telecommunications
 
Term
    Loan B (1/20)
 
Loan
 
1M
    USD LIBOR+ 2.25 %
 
 
0.00
%
 
 
6.88
%
 
3/15/2027
 
 
3,887,492
 
 
 
3,883,600
 
 
 
3,208,269
 

Charlotte
    Buyer, Inc.
 
Services:
    Business
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 5.25 %
 
 
0.00
%
 
 
9.81
%
 
2/11/2028
 
 
1,500,000
 
 
 
1,403,100
 
 
 
1,455,945
 

Chemours
    Company, (The)
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 1.75 %
 
 
0.00
%
 
 
6.39
%
 
4/3/2025
 
 
905,031
 
 
 
880,859
 
 
 
898,406
 

Churchill
    Downs Incorporated
 
Hotel,
    Gaming & Leisure
 
Term
    Loan B1 (3/21)
 
Loan
 
1M
    USD LIBOR+ 2.00 %
 
 
0.00
%
 
 
6.64
%
 
3/17/2028
 
 
491,250
 
 
 
490,382
 
 
 
486,952
 

CIMPRESS
    PUBLIC LIMITED COMPANY
 
Media:
    Advertising, Printing & Publishing
 
USD
    Term Loan
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.50
%
 
 
8.13
%
 
5/17/2028
 
 
1,979,950
 
 
 
1,892,607
 
 
 
1,785,419
 

CITADEL
    SECURITIES LP
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B (01/21)
 
Loan
 
1M
    USD SOFR+ 2.50 %
 
 
0.00
%
 
 
7.23
%
 
2/2/2028
 
 
4,912,500
 
 
 
4,910,914
 
 
 
4,865,684
 

Clarios
    Global LP
 
Automotive
 
Term
    Loan B1
 
Loan
 
1M
    USD LIBOR+ 3.25 %
 
 
0.00
%
 
 
7.88
%
 
4/30/2026
 
 
1,267,812
 
 
 
1,261,524
 
 
 
1,260,091
 

Claros
    Mortgage Trust, Inc
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B-1 (11/21)
 
Loan
 
1M
    USD SOFR+ 4.50 %
 
 
0.50
%
 
 
9.16
%
 
8/9/2026
 
 
3,439,962
 
 
 
3,421,651
 
 
 
3,401,262
 

CLYDESDALE
    ACQUISITION HOLDINGS, INC.
 
Containers,
    Packaging & Glass
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 4.18 %
 
 
0.50
%
 
 
8.89
%
 
4/13/2029
 
 
1,492,500
 
 
 
1,458,949
 
 
 
1,469,993
 

Cole
    Haan
 
Consumer
    goods: Non-durable
 
Term
    Loan B
 
Loan
 
3M
    USD LIBOR+ 5.50 %
 
 
0.00
%
 
 
10.23
%
 
2/7/2025
 
 
875,000
 
 
 
871,486
 
 
 
841,461
 

Columbus
    McKinnon Corporation
 
Capital
    Equipment
 
Term
    Loan (4/21)
 
Loan
 
3M
    USD LIBOR+ 2.75 %
 
 
0.50
%
 
 
7.50
%
 
5/14/2028
 
 
449,172
 
 
 
448,339
 
 
 
446,926
 

 


S-30
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments

February 28, 2023
 



Issuer
    Name
 
Industry
 
Asset
    Name
 
Asset
    
    Type
 
Reference
    Rate/Spread
 
SOFR/
    LIBOR Floor
 
 
Current
    Rate (All In)
 
 
Maturity
    Date
 
Principal/
    Number of Shares
 
 
Cost
 
 
Fair
    Value
 

Conduent,
    Inc.
 
Services:
    Business
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 4.25 %
 
 
0.50
%
 
 
8.88
%
 
10/16/2028
 
 
1,787,985
 
 
 
1,755,247
 
 
 
1,742,177
 

Connect
    Finco SARL
 
Telecommunications
 
Term
    Loan (1/21)
 
Loan
 
1M
    USD SOFR+ 3.50 %
 
 
1.00
%
 
 
8.14
%
 
12/11/2026
 
 
2,917,500
 
 
 
2,816,917
 
 
 
2,863,526
 

Consolidated
    Communications, Inc.
 
Telecommunications
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.75
%
 
 
8.19
%
 
10/2/2027
 
 
2,714,005
 
 
 
2,520,099
 
 
 
2,435,819
 

CORAL-US
    CO-BORROWER LLC
 
Telecommunications
 
Term
    Loan B-5
 
Loan
 
1M
    USD LIBOR+ 2.25 %
 
 
0.00
%
 
 
6.84
%
 
1/31/2028
 
 
4,000,000
 
 
 
3,988,733
 
 
 
3,867,160
 

Corelogic,
    Inc.
 
Services:
    Business
 
Term
    Loan (4/21)
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.50
%
 
 
8.19
%
 
6/2/2028
 
 
2,468,750
 
 
 
2,459,383
 
 
 
2,110,164
 

Cortes
    NP Acquisition Corp (Vertiv)
 
Capital
    Equipment
 
Term
    Loan 2/21
 
Loan
 
1M
    USD LIBOR+ 2.75 %
 
 
0.00
%
 
 
7.32
%
 
3/2/2027
 
 
1,960,000
 
 
 
1,960,000
 
 
 
1,934,579
 

COWEN
    INC.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan
 
Loan
 
6M
    USD LIBOR+ 3.25 %
 
 
0.00
%
 
 
7.43
%
 
3/24/2028
 
 
3,927,406
 
 
 
3,907,308
 
 
 
3,922,496
 

Creative
    Artists Agency, LLC
 
Media:
    Diversified & Production
 
Term
    Loan B (02/23)
 
Loan
 
1M
    USD SOFR+ 3.50 %
 
 
0.00
%
 
 
8.06
%
 
11/1/2028
 
 
1,600,000
 
 
 
1,588,000
 
 
 
1,595,008
 

CROCS
    INC
 
Consumer
    goods: Durable
 
Term
    Loan
 
Loan
 
6M
    USD SOFR+ 3.50 %
 
 
0.50
%
 
 
7.73
%
 
2/20/2029
 
 
2,512,500
 
 
 
2,421,039
 
 
 
2,504,133
 

Cross
    Financial Corp
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B (3/21)
 
Loan
 
1M
    USD LIBOR+ 4.00 %
 
 
0.75
%
 
 
8.69
%
 
9/15/2027
 
 
492,500
 
 
 
492,174
 
 
 
489,422
 

Crown
    Subsea Communications Holding, Inc.
 
Construction
    & Building
 
Term
    Loan (4/21)
 
Loan
 
1M
    USD LIBOR+ 4.75 %
 
 
0.75
%
 
 
9.32
%
 
4/27/2027
 
 
3,404,110
 
 
 
3,377,740
 
 
 
3,340,283
 

CSC
    Holdings LLC (Neptune Finco Corp.)
 
Media:
    Broadcasting & Subscription
 
Term
    Loan B-5
 
Loan
 
1M
    USD LIBOR+ 2.50 %
 
 
0.00
%
 
 
7.09
%
 
4/15/2027
 
 
485,000
 
 
 
485,000
 
 
 
435,894
 

CSC
    Holdings LLC (Neptune Finco Corp.)
 
Media:
    Broadcasting & Subscription
 
Term
    Loan 12/22
 
Loan
 
1M
    USD SOFR+ 4.50 %
 
 
0.00
%
 
 
9.06
%
 
4/15/2027
 
 
2,400,032
 
 
 
2,389,363
 
 
 
2,244,030
 

CTS
    Midco, LLC
 
High
    Tech Industries
 
Term
    Loan B
 
Loan
 
3M
    USD LIBOR+ 6.00 %
 
 
1.00
%
 
 
10.83
%
 
11/2/2027
 
 
1,960,000
 
 
 
1,917,602
 
 
 
1,666,000
 

Daseke
    Inc
 
Transportation:
    Cargo
 
Term
    Loan 2/21
 
Loan
 
1M
    USD LIBOR+ 4.00 %
 
 
0.75
%
 
 
8.64
%
 
3/5/2028
 
 
1,473,750
 
 
 
1,468,500
 
 
 
1,468,223
 

Dave
    & Buster’s Inc.
 
Hotel,
    Gaming & Leisure
 
Term
    Loan B (04/22)
 
Loan
 
1M
    USD SOFR+ 5.00 %
 
 
0.50
%
 
 
9.75
%
 
6/29/2029
 
 
995,000
 
 
 
948,574
 
 
 
997,736
 

DCert
    Buyer, Inc.
 
High
    Tech Industries
 
Term
    Loan
 
Loan
 
6M
    USD SOFR+ 4.00 %
 
 
0.00
%
 
 
8.70
%
 
10/16/2026
 
 
1,469,773
 
 
 
1,469,773
 
 
 
1,446,257
 

Delek
    US Holdings, Inc.
 
Utilities:
    Oil & Gas
 
Term
    Loan B (11/22)
 
Loan
 
1M
    USD SOFR+ 3.50 %
 
 
0.50
%
 
 
8.22
%
 
11/16/2029
 
 
5,400,000
 
 
 
5,285,256
 
 
 
5,298,750
 

Delta
    2 Lux Sarl
 
Hotel,
    Gaming & Leisure
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 3.25 %
 
 
0.50
%
 
 
7.87
%
 
1/15/2030
 
 
1,000,000
 
 
 
990,424
 
 
 
1,001,750
 

DexKo
    Global, Inc. (Dragon Merger)
 
Automotive
 
Term
    Loan (9/21)
 
Loan
 
3M
    USD LIBOR+ 3.75 %
 
 
0.50
%
 
 
8.48
%
 
10/4/2028
 
 
992,500
 
 
 
989,236
 
 
 
928,980
 

DG
    Investment Intermediate Holdings 2, Inc.
 
Aerospace
    & Defense
 
Incremental
    Term Loan (3/22)
 
Loan
 
1M
    USD SOFR+ 4.75 %
 
 
0.75
%
 
 
9.37
%
 
3/31/2028
 
 
498,750
 
 
 
479,659
 
 
 
488,152
 

Diamond
    Sports Group, LLC (b)
 
Media:
    Broadcasting & Subscription
 
Second
    Lien Term Loan
 
Loan
 
3M
    USD SOFR+ 3.40 %
 
 
0.00
%
 
 
8.03
%
 
8/24/2026
 
 
3,374,880
 
 
 
3,017,273
 
 
 
382,306
 

Diamond
    Sports Group, LLC (b)
 
Media:
    Broadcasting & Subscription
 
1st
    Priority Term Loan
 
Loan
 
6M
    USD SOFR+ 8.00 %
 
 
1.00
%
 
 
13.06
%
 
5/25/2026
 
 
342,343
 
 
 
333,975
 
 
 
318,951
 

DIRECTV
    FINANCING, LLC
 
Media:
    Broadcasting & Subscription
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 5.00 %
 
 
0.75
%
 
 
9.63
%
 
8/2/2027
 
 
3,550,000
 
 
 
3,523,794
 
 
 
3,448,754
 

DISCOVERY
    PURCHASER CORPORATION
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan
 
Loan
 
3M
    USD SOFR+ 4.38 %
 
 
0.50
%
 
 
8.96
%
 
10/4/2029
 
 
1,500,000
 
 
 
1,385,334
 
 
 
1,433,310
 

Dispatch
    Acquisition Holdings, LLC
 
Environmental
    Industries
 
Term
    Loan B (3/21)
 
Loan
 
3M
    USD LIBOR+ 4.25 %
 
 
0.75
%
 
 
8.98
%
 
3/25/2028
 
 
492,500
 
 
 
488,806
 
 
 
434,631
 

 


S-31
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments

February 28, 2023
 



Issuer
    Name
 
Industry
 
Asset
    Name
 
Asset
    
    Type
 
Reference
    Rate/Spread
 
SOFR/
    LIBOR Floor
 
 
Current
    Rate (All In)
 
 
Maturity
    Date
 
Principal/
    Number of Shares
 
 
Cost
 
 
Fair
    Value
 

DOMTAR
    CORPORATION
 
Forest
    Products & Paper
 
Term
    Loan 9/21
 
Loan
 
1M
    USD LIBOR+ 5.50 %
 
 
0.75
%
 
 
10.10
%
 
11/30/2028
 
 
1,310,136
 
 
 
1,272,492
 
 
 
1,286,121
 

DOTDASH
    MEREDITH, INC.
 
Media:
    Advertising, Printing & Publishing
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 4.00 %
 
 
0.50
%
 
 
8.67
%
 
11/30/2028
 
 
1,994,949
 
 
 
1,803,027
 
 
 
1,755,556
 

DRI
    HOLDING INC.
 
Media:
    Advertising, Printing & Publishing
 
Term
    Loan (12/21)
 
Loan
 
1M
    USD LIBOR+ 5.25 %
 
 
0.50
%
 
 
9.88
%
 
12/15/2028
 
 
3,972,487
 
 
 
3,830,439
 
 
 
3,552,913
 

DRW
    Holdings, LLC
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan (2/21)
 
Loan
 
1M
    USD LIBOR+ 3.75 %
 
 
0.00
%
 
 
8.38
%
 
3/1/2028
 
 
6,435,000
 
 
 
6,396,896
 
 
 
6,284,164
 

DTZ
    U.S. Borrower, LLC
 
Construction
    & Building
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 2.75 %
 
 
0.00
%
 
 
7.38
%
 
8/21/2025
 
 
1,612,878
 
 
 
1,609,665
 
 
 
1,602,798
 

DTZ
    U.S. Borrower, LLC
 
Construction
    & Building
 
Term
    Loan (01/23)
 
Loan
 
1M
    USD SOFR+ 3.25 %
 
 
0.00
%
 
 
7.97
%
 
1/31/2030
 
 
2,034,413
 
 
 
2,031,025
 
 
 
2,021,698
 

EAB
    Global, Inc.
 
Services:
    Business
 
Term
    Loan (08/21)
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.50
%
 
 
8.13
%
 
8/16/2028
 
 
990,000
 
 
 
985,965
 
 
 
969,586
 

Echo
    Global Logistics, Inc.
 
Services:
    Business
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.50
%
 
 
8.13
%
 
11/23/2028
 
 
1,985,000
 
 
 
1,981,077
 
 
 
1,916,776
 

Edelman
    Financial Group Inc., The
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B (3/21)
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.75
%
 
 
8.13
%
 
4/7/2028
 
 
2,188,547
 
 
 
2,182,686
 
 
 
2,129,281
 

Electrical
    Components Inter., Inc.
 
Capital
    Equipment
 
Term
    Loan (6/18)
 
Loan
 
1M
    USD LIBOR+ 4.25 %
 
 
0.00
%
 
 
8.88
%
 
6/26/2025
 
 
1,888,404
 
 
 
1,888,404
 
 
 
1,719,638
 

ELECTRON
    BIDCO INC.
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 3.00 %
 
 
0.50
%
 
 
7.63
%
 
11/1/2028
 
 
496,250
 
 
 
494,396
 
 
 
491,208
 

ELO
    Touch Solutions, Inc.
 
Media:
    Diversified & Production
 
Term
    Loan (12/18)
 
Loan
 
1M
    USD LIBOR+ 6.50 %
 
 
0.00
%
 
 
11.13
%
 
12/14/2025
 
 
2,175,269
 
 
 
2,121,627
 
 
 
2,169,831
 

Embecta
    Corp
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan B
 
Loan
 
6M
    USD SOFR+ 3.00 %
 
 
0.50
%
 
 
7.79
%
 
3/30/2029
 
 
614,918
 
 
 
611,634
 
 
 
604,735
 

Endo
    Luxembourg Finance Company I S.a.r.l.
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan (3/21)
 
Loan
 
 Prime
    6.00 %
 
 
0.75
%
 
 
13.75
%
 
3/27/2028
 
 
2,335,285
 
 
 
2,328,380
 
 
 
1,839,037
 

Endure
    Digital, Inc.
 
High
    Tech Industries
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.75
%
 
 
8.07
%
 
2/10/2028
 
 
2,462,500
 
 
 
2,453,593
 
 
 
2,276,581
 

Entain
    Holdings (Gibraltar) Limited
 
Hotel,
    Gaming & Leisure
 
Term
    Loan B (10/22)
 
Loan
 
3M
    USD SOFR+ 3.50 %
 
 
0.50
%
 
 
8.18
%
 
10/30/2029
 
 
1,000,000
 
 
 
987,635
 
 
 
999,060
 

Envision
    Healthcare Corporation
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan B (06/18)
 
Loan
 
3M
    USD LIBOR+ 3.75 %
 
 
0.00
%
 
 
8.48
%
 
10/10/2025
 
 
4,784,383
 
 
 
4,782,311
 
 
 
1,202,076
 

EOS
    U.S. FINCO LLC
 
Transportation:
    Cargo
 
Term
    Loan
 
Loan
 
3M
    USD SOFR+ 6.00 %
 
 
0.50
%
 
 
10.60
%
 
8/3/2029
 
 
1,000,000
 
 
 
923,495
 
 
 
986,250
 

Equiniti
    Group PLC
 
Services:
    Business
 
Term
    Loan B
 
Loan
 
6M
    USD SOFR+ 4.50 %
 
 
0.50
%
 
 
9.54
%
 
12/11/2028
 
 
990,000
 
 
 
981,797
 
 
 
990,624
 

EyeCare
    Partners, LLC
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 3.75 %
 
 
0.00
%
 
 
8.48
%
 
2/18/2027
 
 
1,948,081
 
 
 
1,948,081
 
 
 
1,621,174
 

Finco
    I LLC
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B (9/20)
 
Loan
 
1M
    USD LIBOR+ 2.50 %
 
 
0.00
%
 
 
7.13
%
 
6/27/2025
 
 
2,830,950
 
 
 
2,826,805
 
 
 
2,830,950
 

First
    Brands Group, LLC
 
Automotive
 
1st
    Lien Term Loan (3/21)
 
Loan
 
6M
    USD SOFR+ 5.00 %
 
 
1.00
%
 
 
10.25
%
 
3/30/2027
 
 
4,912,500
 
 
 
4,854,265
 
 
 
4,754,367
 

First
    Eagle Investment Management
 
Banking,
    Finance, Insurance & Real Estate
 
Refinancing
    Term Loan
 
Loan
 
3M
    USD LIBOR+ 2.50 %
 
 
0.00
%
 
 
7.23
%
 
2/1/2027
 
 
5,146,145
 
 
 
5,133,892
 
 
 
5,055,007
 

First
    Student Bidco Inc.
 
Transportation:
    Consumer
 
Term
    Loan B
 
Loan
 
3M
    USD LIBOR+ 3.00 %
 
 
0.50
%
 
 
7.73
%
 
7/21/2028
 
 
723,088
 
 
 
718,928
 
 
 
689,255
 

 


S-32
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments

February 28, 2023
 



Issuer
    Name
 
Industry
 
Asset
    Name
 
Asset
    
    Type
 
Reference
    Rate/Spread
 
SOFR/
    LIBOR Floor
 
 
Current
    Rate (All In)
 
 
Maturity
    Date
 
Principal/
    Number of Shares
 
 
Cost
 
 
Fair
    Value
 

First
    Student Bidco Inc.
 
Transportation:
    Consumer
 
Term
    Loan C
 
Loan
 
3M
    USD LIBOR+ 3.00 %
 
 
0.50
%
 
 
7.73
%
 
7/21/2028
 
 
269,608
 
 
 
268,052
 
 
 
256,993
 

Fitness
    International, LLC (LA Fitness)
 
Services:
    Consumer
 
Term
    Loan B (4/18)
 
Loan
 
3M
    USD SOFR+ 3.25 %
 
 
1.00
%
 
 
8.08
%
 
4/18/2025
 
 
1,330,058
 
 
 
1,326,810
 
 
 
1,268,211
 

Flutter
    Financing B.V.
 
Hotel,
    Gaming & Leisure
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 2.25 %
 
 
0.00
%
 
 
6.98
%
 
7/21/2026
 
 
1,975,000
 
 
 
1,972,044
 
 
 
1,971,643
 

Flutter
    Financing B.V.
 
Hotel,
    Gaming & Leisure
 
Third
    Amendment 2028-B Term Loan
 
Loan
 
3M
    USD SOFR+ 3.25 %
 
 
0.50
%
 
 
8.09
%
 
7/21/2028
 
 
748,125
 
 
 
732,248
 
 
 
747,848
 

FOCUS
    FINANCIAL PARTNERS, LLC
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 3.25 %
 
 
0.50
%
 
 
7.87
%
 
6/30/2028
 
 
1,487,298
 
 
 
1,470,684
 
 
 
1,477,765
 

Franchise
    Group, Inc.
 
Services:
    Consumer
 
First
    Out Term Loan
 
Loan
 
3M
    USD LIBOR+ 4.75 %
 
 
0.75
%
 
 
9.56
%
 
3/10/2026
 
 
799,104
 
 
 
793,938
 
 
 
760,148
 

Franchise
    Group, Inc.
 
Services:
    Consumer
 
Term
    Loan B
 
Loan
 
3M
    USD SOFR+ 4.75 %
 
 
0.75
%
 
 
9.70
%
 
3/10/2026
 
 
3,000,000
 
 
 
2,852,614
 
 
 
2,857,500
 

Franklin
    Square Holdings, L.P.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 2.25 %
 
 
0.00
%
 
 
6.94
%
 
8/1/2025
 
 
4,308,730
 
 
 
4,296,025
 
 
 
4,303,344
 

Froneri
    International (R&R Ice Cream)
 
Beverage,
    Food & Tobacco
 
Term
    Loan B-2
 
Loan
 
1M
    USD LIBOR+ 2.25 %
 
 
0.00
%
 
 
6.88
%
 
1/29/2027
 
 
1,950,000
 
 
 
1,948,124
 
 
 
1,915,524
 

Garrett
    LX III S.a r.l.
 
Automotive
 
Dollar
    Term Loan
 
Loan
 
3M
    USD LIBOR+ 3.25 %
 
 
0.50
%
 
 
8.08
%
 
4/30/2028
 
 
1,481,250
 
 
 
1,475,822
 
 
 
1,460,261
 

Gates
    Global LLC
 
Automotive
 
Term
    Loan (11/22)
 
Loan
 
1M
    USD SOFR+ 3.50 %
 
 
0.50
%
 
 
8.12
%
 
11/15/2029
 
 
249,375
 
 
 
242,119
 
 
 
249,121
 

Gemini
    HDPE LLC
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan B (12/20)
 
Loan
 
3M
    USD LIBOR+ 3.00 %
 
 
0.50
%
 
 
7.83
%
 
12/31/2027
 
 
2,289,884
 
 
 
2,276,592
 
 
 
2,281,297
 

Genesee
    & Wyoming, Inc.
 
Transportation:
    Cargo
 
Term
    Loan (11/19)
 
Loan
 
3M
    USD LIBOR+ 2.00 %
 
 
0.00
%
 
 
6.73
%
 
12/30/2026
 
 
1,458,750
 
 
 
1,454,820
 
 
 
1,453,892
 

GGP
    Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 2.50 %
 
 
0.00
%
 
 
2.96
%
 
8/27/2025
 
 
3,072,992
 
 
 
2,734,560
 
 
 
3,053,141
 

Global
    Tel*Link Corporation
 
Telecommunications
 
Term
    Loan B
 
Loan
 
3M
    USD SOFR+ 4.25 %
 
 
0.00
%
 
 
9.08
%
 
11/29/2025
 
 
4,897,634
 
 
 
4,753,219
 
 
 
4,342,830
 

Go
    Daddy Operating Company, LLC
 
High
    Tech Industries
 
Term
    Loan 2/21
 
Loan
 
1M
    USD LIBOR+ 2.00 %
 
 
0.00
%
 
 
6.63
%
 
8/10/2027
 
 
1,959,799
 
 
 
1,959,799
 
 
 
1,950,255
 

GOLDEN
    WEST PACKAGING GROUP LLC
 
Forest
    Products & Paper
 
Term
    Loan (11/21)
 
Loan
 
1M
    USD LIBOR+ 5.25 %
 
 
0.75
%
 
 
9.88
%
 
12/1/2027
 
 
1,962,500
 
 
 
1,946,411
 
 
 
1,903,625
 

Graham
    Packaging Co Inc
 
Containers,
    Packaging & Glass
 
Term
    Loan (2/21)
 
Loan
 
1M
    USD LIBOR+ 3.00 %
 
 
0.75
%
 
 
7.63
%
 
8/7/2027
 
 
962,517
 
 
 
957,931
 
 
 
956,501
 

Great
    Outdoors Group, LLC
 
Retail
 
Term
    Loan B2
 
Loan
 
1M
    USD LIBOR+ 3.75 %
 
 
0.75
%
 
 
8.38
%
 
3/6/2028
 
 
980,094
 
 
 
976,551
 
 
 
964,471
 

Greenhill
    & Co., Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B
 
Loan
 
3M
    USD LIBOR+ 3.25 %
 
 
0.00
%
 
 
8.20
%
 
4/12/2024
 
 
2,844,231
 
 
 
2,836,329
 
 
 
2,789,707
 

Griffon
    Corporation
 
Consumer
    goods: Durable
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 2.50 %
 
 
0.50
%
 
 
7.20
%
 
1/24/2029
 
 
154,375
 
 
 
154,051
 
 
 
152,959
 

Grosvenor
    Capital Management Holdings, LLLP
 
Banking,
    Finance, Insurance & Real Estate
 
Amendment
    5 Term Loan
 
Loan
 
1M
    USD LIBOR+ 2.50 %
 
 
0.50
%
 
 
7.13
%
 
2/24/2028
 
 
2,836,805
 
 
 
2,834,453
 
 
 
2,808,437
 

Groupe
    Solmax Inc.
 
Environmental
    Industries
 
Term
    Loan (6/21)
 
Loan
 
3M
    USD LIBOR+ 4.75 %
 
 
0.75
%
 
 
9.48
%
 
5/27/2028
 
 
1,994,937
 
 
 
1,625,873
 
 
 
1,720,633
 

Harbor
    Freight Tools USA, Inc.
 
Retail
 
Term
    Loan B (06/21)
 
Loan
 
1M
    USD LIBOR+ 2.75 %
 
 
0.50
%
 
 
7.38
%
 
10/19/2027
 
 
3,438,442
 
 
 
3,420,645
 
 
 
3,324,355
 

Helix
    Gen Funding, LLc
 
Energy:
    Electricity
 
Term
    Loan B (02/17)
 
Loan
 
1M
    USD LIBOR+ 3.75 %
 
 
1.00
%
 
 
8.38
%
 
6/3/2024
 
 
209,702
 
 
 
209,702
 
 
 
208,332
 

Hillman
    Group Inc. (The) (New)
 
Consumer
    goods: Durable
 
Term
    Loan B-1 (2/21)
 
Loan
 
1M
    USD LIBOR+ 2.75 %
 
 
0.50
%
 
 
7.38
%
 
7/14/2028
 
 
3,479,167
 
 
 
3,473,274
 
 
 
3,441,105
 

Hillman
    Group Inc. (The) (New) (a)
 
Consumer
    goods: Durable
 
Delayed
    Draw Term Loan (2/21)
 
Loan
 
1M
    USD LIBOR+ 2.75 %
 
 
0.50
%
 
 
7.38
%
 
7/14/2028
 
 
66,667
 
 
 
66,667
 
 
 
57,444
 

HLF
    Financing SARL (Herbalife)
 
Consumer
    goods: Non-durable
 
Term
    Loan B (08/18)
 
Loan
 
1M
    USD LIBOR+ 2.50 %
 
 
0.00
%
 
 
7.13
%
 
8/18/2025
 
 
3,510,000
 
 
 
3,504,423
 
 
 
3,452,225
 

 


S-33
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments

February 28, 2023
 



Issuer
    Name
 
Industry
 
Asset
    Name
 
Asset
    
    Type
 
Reference
    Rate/Spread
 
SOFR/
    LIBOR Floor
 
 
Current
    Rate (All In)
 
 
Maturity
    Date
 
Principal/
    Number of Shares
 
 
Cost
 
 
Fair
    Value
 

Holley
    Purchaser, Inc
 
Automotive
 
Term
    Loan (11/21)
 
Loan
 
3M
    USD LIBOR+ 3.75 %
 
 
0.75
%
 
 
8.48
%
 
11/17/2028
 
 
2,317,577
 
 
 
2,309,047
 
 
 
1,888,825
 

Howden
    Group Holdings
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan (1/21)
 
Loan
 
1M
    USD LIBOR+ 3.25 %
 
 
0.75
%
 
 
7.94
%
 
11/12/2027
 
 
2,152,191
 
 
 
2,144,311
 
 
 
2,117,218
 

Hudson
    River Trading LLC
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan (3/21)
 
Loan
 
1M
    USD SOFR+ 3.00 %
 
 
0.00
%
 
 
7.73
%
 
3/17/2028
 
 
5,895,000
 
 
 
5,850,826
 
 
 
5,619,173
 

Idera,
    Inc.
 
High
    Tech Industries
 
Term
    Loan (02/21)
 
Loan
 
3M
    USD LIBOR+ 3.75 %
 
 
0.75
%
 
 
8.51
%
 
3/2/2028
 
 
4,811,111
 
 
 
4,802,585
 
 
 
4,635,698
 

IMA
    Financial Group, Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan (10/21)
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.50
%
 
 
8.13
%
 
11/1/2028
 
 
1,980,000
 
 
 
1,972,160
 
 
 
1,947,825
 

INDY
    US BIDCO, LLC
 
Services:
    Business
 
Term
    Loan (11/21)
 
Loan
 
1M
    USD LIBOR+ 3.75 %
 
 
0.00
%
 
 
8.38
%
 
3/6/2028
 
 
2,215,703
 
 
 
2,215,226
 
 
 
1,888,200
 

Ineos
    US Finance LLC
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan C
 
Loan
 
1M
    USD SOFR+ 3.75 %
 
 
0.00
%
 
 
8.42
%
 
2/9/2030
 
 
1,000,000
 
 
 
990,000
 
 
 
991,560
 

INEOS
    US PETROCHEM LLC
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan (1/21)
 
Loan
 
1M
    USD LIBOR+ 2.75 %
 
 
0.50
%
 
 
7.38
%
 
1/29/2026
 
 
1,979,950
 
 
 
1,929,143
 
 
 
1,967,080
 

Informatica
    Inc.
 
High
    Tech Industries
 
Term
    Loan B (10/21)
 
Loan
 
1M
    USD LIBOR+ 2.75 %
 
 
0.00
%
 
 
7.44
%
 
10/27/2028
 
 
496,250
 
 
 
495,896
 
 
 
494,761
 

Ingram
    Micro Inc.
 
Wholesale
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 3.50 %
 
 
0.50
%
 
 
8.23
%
 
6/30/2028
 
 
1,477,500
 
 
 
1,465,872
 
 
 
1,468,266
 

Inmar
    Acquisition Sub, Inc.
 
Services:
    Business
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 4.00 %
 
 
1.00
%
 
 
8.63
%
 
5/1/2024
 
 
3,350,673
 
 
 
3,327,770
 
 
 
3,270,055
 

Innophos,
    Inc.
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 3.25 %
 
 
0.00
%
 
 
7.88
%
 
2/4/2027
 
 
486,250
 
 
 
484,966
 
 
 
483,007
 

INSTANT
    BRANDS HOLDINGS INC.
 
Consumer
    goods: Durable
 
Term
    Loan 4/21
 
Loan
 
3M
    USD LIBOR+ 5.00 %
 
 
0.75
%
 
 
9.95
%
 
4/7/2028
 
 
4,027,667
 
 
 
4,010,741
 
 
 
2,154,802
 

IRB
    Holding Corporation
 
Beverage,
    Food & Tobacco
 
Term
    Loan B3
 
Loan
 
1M
    USD SOFR+ 3.00 %
 
 
0.75
%
 
 
7.57
%
 
12/14/2027
 
 
500,000
 
 
 
495,150
 
 
 
493,125
 

IRB
    Holding T/L B (1/22)
 
Beverage,
    Food & Tobacco
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 3.00 %
 
 
0.75
%
 
 
7.69
%
 
12/15/2027
 
 
500,000
 
 
 
495,150
 
 
 
493,125
 

Isagenix
    International, LLC (b)
 
Beverage,
    Food & Tobacco
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 7.75 %
 
 
1.00
%
 
 
11.35
%
 
6/14/2025
 
 
2,330,036
 
 
 
2,311,947
 
 
 
814,068
 

J
    Jill Group, Inc
 
Retail
 
Priming
    Term Loan
 
Loan
 
3M
    USD LIBOR+ 5.00 %
 
 
1.00
%
 
 
9.83
%
 
5/8/2024
 
 
1,553,698
 
 
 
1,553,299
 
 
 
1,464,361
 

Jane
    Street Group
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan (1/21)
 
Loan
 
1M
    USD LIBOR+ 2.75 %
 
 
0.00
%
 
 
7.38
%
 
1/31/2028
 
 
3,920,000
 
 
 
3,917,671
 
 
 
3,897,970
 

Journey
    Personal Care Corp.
 
Consumer
    goods: Non-durable
 
Term
    Loan B
 
Loan
 
3M
    USD LIBOR+ 4.25 %
 
 
0.75
%
 
 
8.98
%
 
3/1/2028
 
 
985,000
 
 
 
981,310
 
 
 
731,569
 

JP
    Intermediate B, LLC
 
Consumer
    goods: Non-durable
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 5.50 %
 
 
1.00
%
 
 
10.33
%
 
11/15/2025
 
 
3,884,160
 
 
 
3,863,896
 
 
 
2,469,199
 

Klockner-Pentaplast
    of America, Inc.
 
Containers,
    Packaging & Glass
 
Term
    Loan (1/21) (USD)
 
Loan
 
6M
    USD SOFR+ 4.75 %
 
 
0.50
%
 
 
10.13
%
 
2/12/2026
 
 
1,473,750
 
 
 
1,469,605
 
 
 
1,354,936
 

Kodiak
    BP, LLC
 
Construction
    & Building
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 3.25 %
 
 
0.75
%
 
 
7.98
%
 
3/13/2028
 
 
491,242
 
 
 
490,111
 
 
 
472,083
 

KREF
    Holdings X LLC
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan (11/21)
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.50
%
 
 
8.13
%
 
9/1/2027
 
 
491,288
 
 
 
482,835
 
 
 
482,690
 

Lakeland
    Tours, LLC
 
Hotel,
    Gaming & Leisure
 
Holdco
    Fixed Term Loan
 
Loan
 
Fixed
    0.00 %
 
 
0.00
%
 
 
13.25
%
 
9/27/2027
 
 
990,775
 
 
 
383,373
 
 
 
644,004
 

Lealand
    Finance Company B.V.
 
Energy:
    Oil & Gas
 
Exit
    Term Loan
 
Loan
 
1M
    USD LIBOR+ 1.00 %
 
 
0.00
%
 
 
5.63
%
 
6/30/2025
 
 
345,078
 
 
 
345,078
 
 
 
221,426
 

LHS
    BORROWER, LLC
 
Construction
    & Building
 
Term
    Loan (02/22)
 
Loan
 
1M
    USD SOFR+ 4.75 %
 
 
0.50
%
 
 
9.47
%
 
2/16/2029
 
 
997,487
 
 
 
815,989
 
 
 
817,940
 

Lifetime
    Brands, Inc
 
Consumer
    goods: Non-durable
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 3.50 %
 
 
1.00
%
 
 
8.23
%
 
2/28/2025
 
 
2,616,496
 
 
 
2,602,628
 
 
 
2,295,975
 

Liquid
    Tech Solutions Holdings, LLC
 
Services:
    Business
 
Term
    Loan
 
Loan
 
6M
    USD LIBOR+ 4.75 %
 
 
0.00
%
 
 
8.92
%
 
3/17/2028
 
 
985,000
 
 
 
982,312
 
 
 
940,675
 

 


S-34
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments

February 28, 2023
 



Issuer
    Name
 
Industry
 
Asset
    Name
 
Asset
    
    Type
 
Reference
    Rate/Spread
 
SOFR/
    LIBOR Floor
 
 
Current
    Rate (All In)
 
 
Maturity
    Date
 
Principal/
    Number of Shares
 
 
Cost
 
 
Fair
    Value
 

LogMeIn,
    Inc.
 
High
    Tech Industries
 
Term
    Loan (8/20)
 
Loan
 
1M
    USD LIBOR+ 4.75 %
 
 
0.00
%
 
 
9.38
%
 
8/31/2027
 
 
3,920,000
 
 
 
3,868,809
 
 
 
2,137,145
 

LOYALTY
    VENTURES INC. (b)
 
Services:
    Business
 
Term
    Loan B
 
Loan
 
Prime
    3.50 %
 
 
0.50
%
 
 
11.25
%
 
11/3/2027
 
 
3,089,630
 
 
 
3,074,278
 
 
 
926,889
 

LPL
    Holdings, Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B1
 
Loan
 
1M
    USD LIBOR+ 1.75 %
 
 
0.00
%
 
 
6.32
%
 
11/11/2026
 
 
1,207,856
 
 
 
1,206,501
 
 
 
1,203,701
 

LSF11
    A5 HOLDCO LLC
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan (01/23)
 
Loan
 
1M
    USD SOFR+ 4.25 %
 
 
0.50
%
 
 
8.97
%
 
10/14/2028
 
 
500,000
 
 
 
486,534
 
 
 
489,165
 

LSF11
    A5 HOLDCO LLC
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan
 
Loan
 
1M
    USD SOFR+ 3.50 %
 
 
0.50
%
 
 
8.23
%
 
10/16/2028
 
 
248,125
 
 
 
247,170
 
 
 
241,508
 

LSF9
    Atlantis Holdings, LLC (A Wireless)
 
Retail
 
Term
    Loan B
 
Loan
 
3M
    USD SOFR+ 7.25 %
 
 
0.75
%
 
 
11.83
%
 
3/29/2029
 
 
2,962,500
 
 
 
2,872,908
 
 
 
2,888,438
 

MAGNITE,
    INC.
 
Services:
    Business
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 5.00 %
 
 
0.75
%
 
 
9.63
%
 
4/28/2028
 
 
2,964,950
 
 
 
2,901,156
 
 
 
2,826,575
 

Marriott
    Ownership Resorts, Inc.
 
Hotel,
    Gaming & Leisure
 
Term
    Loan (11/19)
 
Loan
 
1M
    USD LIBOR+ 1.75 %
 
 
0.00
%
 
 
6.38
%
 
8/29/2025
 
 
1,317,074
 
 
 
1,317,074
 
 
 
1,308,842
 

Match
    Group, Inc, The
 
Services:
    Consumer
 
Term
    Loan (1/20)
 
Loan
 
3M
    USD LIBOR+ 1.75 %
 
 
0.00
%
 
 
6.49
%
 
2/15/2027
 
 
250,000
 
 
 
249,658
 
 
 
247,500
 

Maxar
    Technologies Inc
 
Aerospace
    & Defense
 
Term
    Loan (6/22)
 
Loan
 
1M
    USD SOFR+ 4.25 %
 
 
0.50
%
 
 
8.97
%
 
6/14/2029
 
 
1,994,987
 
 
 
1,926,722
 
 
 
1,997,641
 

Mayfield
    Agency Borrower Inc. (FeeCo)
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B (02/23)
 
Loan
 
3M
    USD SOFR+ 5.00 %
 
 
0.00
%
 
 
8.81
%
 
2/27/2028
 
 
3,450,000
 
 
 
3,346,500
 
 
 
3,363,750
 

McGraw-Hill
    Education, Inc.
 
Media:
    Advertising, Printing & Publishing
 
Term
    Loan (07/21)
 
Loan
 
3M
    USD LIBOR+ 4.75 %
 
 
0.50
%
 
 
9.70
%
 
7/28/2028
 
 
1,975,000
 
 
 
1,957,770
 
 
 
1,894,025
 

MedAssets
    Software Inter Hldg, Inc.
 
High
    Tech Industries
 
Term
    Loan (11/21) (USD)
 
Loan
 
1M
    USD LIBOR+ 4.00 %
 
 
0.50
%
 
 
8.63
%
 
12/18/2028
 
 
496,250
 
 
 
493,413
 
 
 
462,753
 

Mermaid
    Bidco Inc.
 
High
    Tech Industries
 
Term
    Loan B2
 
Loan
 
3M
    USD LIBOR+ 3.50 %
 
 
0.75
%
 
 
8.30
%
 
12/22/2027
 
 
983,769
 
 
 
981,224
 
 
 
964,093
 

Messer
    Industries, LLC
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan B
 
Loan
 
3M
    USD LIBOR+ 2.50 %
 
 
0.00
%
 
 
7.23
%
 
3/1/2026
 
 
2,980,405
 
 
 
2,970,477
 
 
 
2,968,871
 

Michaels
    Companies Inc
 
Retail
 
Term
    Loan B (Magic Mergeco)
 
Loan
 
3M
    USD LIBOR+ 4.25 %
 
 
0.75
%
 
 
8.98
%
 
4/8/2028
 
 
2,467,450
 
 
 
2,452,022
 
 
 
2,254,632
 

MPH
    Acquisition Holdings LLC (Multiplan)
 
Services:
    Business
 
Term
    Loan B (08/21)
 
Loan
 
3M
    USD LIBOR+ 4.25 %
 
 
0.50
%
 
 
9.20
%
 
9/1/2028
 
 
2,992,424
 
 
 
2,725,679
 
 
 
2,509,148
 

MW
    Industries, Inc. (Helix Acquisition Holdings)
 
Capital
    Equipment
 
Term
    Loan (2019 Incremental)
 
Loan
 
3M
    USD LIBOR+ 3.75 %
 
 
0.00
%
 
 
8.48
%
 
9/30/2024
 
 
2,842,097
 
 
 
2,823,791
 
 
 
2,778,150
 

NAB
    Holdings, LLC (North American Bancard)
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan (11/21)
 
Loan
 
3M
    USD SOFR+ 3.00 %
 
 
0.50
%
 
 
7.73
%
 
11/23/2028
 
 
2,970,000
 
 
 
2,963,897
 
 
 
2,927,678
 

Napa
    Management Services Corp
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan B (02/22)
 
Loan
 
1M
    USD SOFR+ 5.25 %
 
 
0.75
%
 
 
9.95
%
 
2/22/2029
 
 
3,000,000
 
 
 
2,407,500
 
 
 
2,285,640
 

Natgasoline
    LLC
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.00
%
 
 
8.19
%
 
11/14/2025
 
 
3,436,481
 
 
 
3,419,311
 
 
 
3,395,690
 

National
    Mentor Holdings, Inc.
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan 2/21
 
Loan
 
1M
    USD SOFR+ 3.75 %
 
 
0.75
%
 
 
8.47
%
 
3/2/2028
 
 
2,736,043
 
 
 
2,727,702
 
 
 
2,108,477
 

National
    Mentor Holdings, Inc.
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan C 2/21
 
Loan
 
3M
    USD LIBOR+ 3.75 %
 
 
0.75
%
 
 
8.48
%
 
3/2/2028
 
 
87,464
 
 
 
87,137
 
 
 
67,402
 

NEW
    ERA CAP, LLC
 
Consumer
    goods: Durable
 
Term
    Loan (01/22)
 
Loan
 
3M
    USD LIBOR+ 6.00 %
 
 
0.75
%
 
 
10.82
%
 
7/13/2027
 
 
3,628,164
 
 
 
3,627,422
 
 
 
3,483,037
 

Nexstar
    Broadcasting, Inc. (Mission Broadcasting)
 
Media:
    Broadcasting & Subscription
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 2.50 %
 
 
0.00
%
 
 
7.13
%
 
9/18/2026
 
 
657,625
 
 
 
652,850
 
 
 
655,745
 

Next
    Level Apparel, Inc.
 
Retail
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 5.50 %
 
 
1.00
%
 
 
10.33
%
 
8/9/2024
 
 
1,675,340
 
 
 
1,670,519
 
 
 
1,373,779
 

 


S-35
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments

February 28, 2023
 



Issuer
    Name
 
Industry
 
Asset
    Name
 
Asset
    
    Type
 
Reference
    Rate/Spread
 
SOFR/
    LIBOR Floor
 
 
Current
    Rate (All In)
 
 
Maturity
    Date
 
Principal/
    Number of Shares
 
 
Cost
 
 
Fair
    Value
 

NortonLifeLock
    Inc.
 
High
    Tech Industries
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 2.00 %
 
 
0.50
%
 
 
6.72
%
 
9/12/2029
 
 
1,398,374
 
 
 
1,392,077
 
 
 
1,382,391
 

Novae
    LLC
 
Automotive
 
Term
    Loan B
 
Loan
 
3M
    USD SOFR+ 5.00 %
 
 
0.75
%
 
 
9.82
%
 
12/22/2028
 
 
1,985,000
 
 
 
1,972,048
 
 
 
1,692,213
 

Nuvei
    Technologies Corp.
 
High
    Tech Industries
 
US
    Term Loan
 
Loan
 
1M
    USD LIBOR+ 2.50 %
 
 
0.50
%
 
 
7.13
%
 
9/29/2025
 
 
2,216,250
 
 
 
2,213,211
 
 
 
2,210,709
 

Olaplex,
    Inc.
 
Consumer
    goods: Non-durable
 
Term
    Loan (2/22)
 
Loan
 
1M
    USD SOFR+ 3.50 %
 
 
0.50
%
 
 
8.20
%
 
2/23/2029
 
 
2,492,500
 
 
 
2,386,817
 
 
 
2,224,556
 

Open
    Text Corporation
 
High
    Tech Industries
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 3.50 %
 
 
0.50
%
 
 
8.22
%
 
8/24/2029
 
 
1,500,000
 
 
 
1,455,000
 
 
 
1,496,955
 

Organon
    & Co.
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan USD
 
Loan
 
3M
    USD LIBOR+ 3.00 %
 
 
0.50
%
 
 
7.75
%
 
6/2/2028
 
 
2,327,083
 
 
 
2,318,310
 
 
 
2,297,995
 

Pacific
    Gas & Electric
 
Utilities:
    Electric
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 3.00 %
 
 
0.50
%
 
 
7.69
%
 
6/18/2025
 
 
1,464,944
 
 
 
1,460,891
 
 
 
1,457,619
 

PACTIV
    EVERGREEN GROUP HOLDINGS INC.
 
Containers,
    Packaging & Glass
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 3.25 %
 
 
0.50
%
 
 
7.88
%
 
9/20/2028
 
 
987,500
 
 
 
983,571
 
 
 
981,950
 

Padagis
    LLC
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 4.75 %
 
 
0.50
%
 
 
9.54
%
 
7/6/2028
 
 
941,176
 
 
 
933,570
 
 
 
864,122
 

Panther
    Guarantor II, L.P. (Forcepoint)
 
High
    Tech Industries
 
Term
    Loan 1/21
 
Loan
 
3M
    USD LIBOR+ 4.25 %
 
 
0.50
%
 
 
9.08
%
 
1/7/2028
 
 
492,500
 
 
 
489,882
 
 
 
461,719
 

PAR
    PETROLEUM LLC
 
Energy:
    Oil & Gas
 
Term
    Loan 2/23
 
Loan
 
1M
    USD SOFR+ 4.25 %
 
 
0.50
%
 
 
8.92
%
 
2/13/2030
 
 
1,500,000
 
 
 
1,477,500
 
 
 
1,479,375
 

PATAGONIA
    HOLDCO LLC
 
Telecommunications
 
Term
    Loan B
 
Loan
 
3M
    USD SOFR+ 5.75 %
 
 
0.50
%
 
 
10.47
%
 
8/1/2029
 
 
1,995,000
 
 
 
1,653,635
 
 
 
1,700,738
 

Pathway
    Partners Vet Management Company LLC
 
Services:
    Business
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 3.75 %
 
 
0.00
%
 
 
8.38
%
 
3/30/2027
 
 
486,509
 
 
 
479,333
 
 
 
424,630
 

PCI
    Gaming Authority
 
Hotel,
    Gaming & Leisure
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 2.50 %
 
 
0.00
%
 
 
7.13
%
 
5/29/2026
 
 
809,038
 
 
 
806,994
 
 
 
807,396
 

PEARLS
    (Netherlands) Bidco B.V.
 
Chemicals,
    Plastics, & Rubber
 
USD
    Term Loan (02/22)
 
Loan
 
3M
    USD SOFR+ 3.75 %
 
 
0.50
%
 
 
8.43
%
 
2/28/2029
 
 
992,500
 
 
 
990,539
 
 
 
975,131
 

PEDIATRIC
    ASSOCIATES HOLDING COMPANY, LLC
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan (12/22)
 
Loan
 
1M
    USD LIBOR+ 3.25 %
 
 
0.50
%
 
 
7.88
%
 
12/29/2028
 
 
1,292,862
 
 
 
1,287,663
 
 
 
1,272,396
 

PEDIATRIC
    ASSOCIATES HOLDING COMPANY, LLC (a)
 
Healthcare
    & Pharmaceuticals
 
Delayed
    Draw Term Loan (12/21)
 
Loan
 
1M
    USD LIBOR+ 3.25 %
 
 
0.50
%
 
 
7.88
%
 
12/29/2028
 
 
147,287
 
 
 
147,287
 
 
 
144,174
 

Penn
    National Gaming, Inc
 
Hotel,
    Gaming & Leisure
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 2.75 %
 
 
0.50
%
 
 
7.47
%
 
5/3/2029
 
 
995,000
 
 
 
990,530
 
 
 
990,851
 

Peraton
    Corp.
 
Aerospace
    & Defense
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 3.75 %
 
 
0.75
%
 
 
8.38
%
 
2/1/2028
 
 
5,306,577
 
 
 
5,291,284
 
 
 
5,249,372
 

PHYSICIAN
    PARTNERS, LLC
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan
 
Loan
 
1M
    USD SOFR+ 4.00 %
 
 
0.50
%
 
 
8.72
%
 
12/23/2028
 
 
1,985,000
 
 
 
1,967,896
 
 
 
1,900,638
 

Pike
    Corporation
 
Construction
    & Building
 
Term
    Loan (8/22)
 
Loan
 
1M
    USD SOFR+ 3.50 %
 
 
0.00
%
 
 
8.12
%
 
1/21/2028
 
 
498,750
 
 
 
487,274
 
 
 
497,294
 

Pitney
    Bowes Inc
 
Services:
    Business
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 4.00 %
 
 
0.00
%
 
 
8.73
%
 
3/17/2028
 
 
3,939,924
 
 
 
3,914,651
 
 
 
3,789,734
 

Plastipak
    Holdings Inc.
 
Containers,
    Packaging & Glass
 
Term
    Loan B (11/21)
 
Loan
 
1M
    USD LIBOR+ 2.50 %
 
 
0.50
%
 
 
7.13
%
 
12/1/2028
 
 
1,921,176
 
 
 
1,913,386
 
 
 
1,911,974
 

Playtika
    Holding Corp.
 
High
    Tech Industries
 
Term
    Loan B (3/21)
 
Loan
 
1M
    USD LIBOR+ 2.75 %
 
 
0.00
%
 
 
7.38
%
 
3/13/2028
 
 
4,421,250
 
 
 
4,414,119
 
 
 
4,370,804
 

PMHC
    II, INC.
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan (02/22)
 
Loan
 
3M
    USD SOFR+ 4.25 %
 
 
0.50
%
 
 
9.08
%
 
4/21/2029
 
 
1,995,000
 
 
 
1,986,056
 
 
 
1,710,912
 

PointClickCare
    Technologies, Inc.
 
High
    Tech Industries
 
Term
    Loan B
 
Loan
 
3M
    USD LIBOR+ 3.00 %
 
 
0.75
%
 
 
7.75
%
 
12/29/2027
 
 
491,250
 
 
 
489,531
 
 
 
487,566
 

 


S-36
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments

February 28, 2023
 



Issuer
    Name
 
Industry
 
Asset
    Name
 
Asset
    
    Type
 
Reference
    Rate/Spread
 
SOFR/
    LIBOR Floor
 
 
Current
    Rate (All In)
 
 
Maturity
    Date
 
Principal/
    Number of Shares
 
 
Cost
 
 
Fair
    Value
 

Polymer
    Process Holdings, Inc.
 
Containers,
    Packaging & Glass
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 4.75 %
 
 
0.75
%
 
 
9.38
%
 
2/12/2028
 
 
5,403,750
 
 
 
5,359,857
 
 
 
5,025,488
 

Pre-Paid
    Legal Services, Inc.
 
Services:
    Consumer
 
Term
    Loan (12/21)
 
Loan
 
1M
    USD LIBOR+ 3.75 %
 
 
0.50
%
 
 
8.38
%
 
12/15/2028
 
 
2,977,500
 
 
 
2,956,393
 
 
 
2,929,116
 

Presidio,
    Inc.
 
Services:
    Business
 
Term
    Loan B (1/20)
 
Loan
 
3M
    USD SOFR+ 3.50 %
 
 
0.00
%
 
 
8.28
%
 
1/22/2027
 
 
487,500
 
 
 
486,909
 
 
 
485,267
 

Prime
    Security Services Borrower, LLC (ADT)
 
Services:
    Consumer
 
Term
    Loan (1/21)
 
Loan
 
3M
    USD LIBOR+ 2.75 %
 
 
0.75
%
 
 
7.52
%
 
9/23/2026
 
 
3,520,468
 
 
 
3,520,468
 
 
 
3,511,667
 

PRIORITY
    HOLDINGS, LLC
 
Services:
    Consumer
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 5.75 %
 
 
1.00
%
 
 
10.70
%
 
4/27/2027
 
 
2,955,000
 
 
 
2,932,371
 
 
 
2,936,531
 

PriSo
    Acquisition Corporation
 
Construction
    & Building
 
Term
    Loan (01/21)
 
Loan
 
3M
    USD LIBOR+ 3.25 %
 
 
0.75
%
 
 
8.00
%
 
12/28/2027
 
 
491,245
 
 
 
489,458
 
 
 
450,310
 

Project
    Leopard Holdings, Inc. (NEW)
 
High
    Tech Industries
 
Term
    Loan B (06/22)
 
Loan
 
6M
    USD SOFR+ 5.25 %
 
 
0.50
%
 
 
9.80
%
 
7/20/2029
 
 
1,000,000
 
 
 
933,902
 
 
 
924,690
 

Prometric
    Inc. (Sarbacane Bidco)
 
Services:
    Consumer
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 3.00 %
 
 
1.00
%
 
 
7.64
%
 
1/29/2025
 
 
476,438
 
 
 
475,777
 
 
 
444,278
 

PUG
    LLC
 
Services:
    Consumer
 
Term
    Loan B (02/20)
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.00
%
 
 
8.13
%
 
2/12/2027
 
 
480,126
 
 
 
478,777
 
 
 
378,099
 

QUEST
    BORROWER LIMITED
 
High
    Tech Industries
 
Term
    Loan (1/22)
 
Loan
 
3M
    USD SOFR+ 4.25 %
 
 
0.50
%
 
 
9.08
%
 
2/1/2029
 
 
1,990,000
 
 
 
1,972,710
 
 
 
1,707,539
 

Rackspace
    Technology Global, Inc.
 
High
    Tech Industries
 
Term
    Loan (1/21)
 
Loan
 
3M
    USD LIBOR+ 2.75 %
 
 
0.75
%
 
 
7.60
%
 
2/15/2028
 
 
2,974,823
 
 
 
2,882,889
 
 
 
1,863,310
 

RAND
    PARENT LLC
 
Transportation:
    Cargo
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 4.25 %
 
 
0.00
%
 
 
8.80
%
 
2/7/2030
 
 
1,500,000
 
 
 
1,462,500
 
 
 
1,455,000
 

RealPage,
    Inc.
 
High
    Tech Industries
 
Term
    Loan (04/21)
 
Loan
 
1M
    USD LIBOR+ 3.00 %
 
 
0.50
%
 
 
7.63
%
 
4/24/2028
 
 
987,500
 
 
 
985,860
 
 
 
955,159
 

Renaissance
    Learning, Inc.
 
Services:
    Consumer
 
Term
    Loan (5/18)
 
Loan
 
1M
    USD LIBOR+ 3.25 %
 
 
0.00
%
 
 
7.88
%
 
5/30/2025
 
 
2,938,373
 
 
 
2,922,432
 
 
 
2,871,025
 

Rent-A-Center,
    Inc.
 
Retail
 
Term
    Loan B2 (9/21)
 
Loan
 
3M
    USD LIBOR+ 3.25 %
 
 
0.50
%
 
 
8.13
%
 
2/17/2028
 
 
1,976,155
 
 
 
1,934,422
 
 
 
1,927,997
 

Research
    Now Group, Inc
 
Media:
    Advertising, Printing & Publishing
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 5.50 %
 
 
1.00
%
 
 
10.31
%
 
12/20/2024
 
 
4,298,135
 
 
 
4,249,328
 
 
 
3,200,305
 

Resideo
    Funding Inc.
 
Services:
    Consumer
 
Term
    Loan (1/21)
 
Loan
 
3M
    USD LIBOR+ 2.25 %
 
 
0.50
%
 
 
7.12
%
 
2/11/2028
 
 
1,473,750
 
 
 
1,471,623
 
 
 
1,471,908
 

Resolute
    Investment Managers (American Beacon), Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan (10/20)
 
Loan
 
3M
    USD LIBOR+ 4.25 %
 
 
1.00
%
 
 
8.98
%
 
4/30/2024
 
 
3,038,616
 
 
 
3,035,050
 
 
 
2,385,313
 

Restoration
    Hardware, Inc.
 
Retail
 
Term
    Loan (9/21)
 
Loan
 
1M
    USD LIBOR+ 2.50 %
 
 
0.50
%
 
 
7.13
%
 
10/20/2028
 
 
3,462,437
 
 
 
3,456,353
 
 
 
3,320,477
 

Reynolds
    Consumer Products LLC
 
Containers,
    Packaging & Glass
 
Term
    Loan
 
Loan
 
1M
    USD SOFR+ 1.75 %
 
 
0.00
%
 
 
6.47
%
 
1/29/2027
 
 
1,276,932
 
 
 
1,276,737
 
 
 
1,273,880
 

Reynolds
    Group Holdings Inc.
 
Containers,
    Packaging & Glass
 
Term
    Loan B2
 
Loan
 
1M
    USD LIBOR+ 3.25 %
 
 
0.00
%
 
 
7.88
%
 
2/5/2026
 
 
3,124,551
 
 
 
3,114,804
 
 
 
3,114,302
 

Rocket
    Software, Inc.
 
High
    Tech Industries
 
Term
    Loan (11/18)
 
Loan
 
1M
    USD LIBOR+ 4.25 %
 
 
0.00
%
 
 
8.88
%
 
11/28/2025
 
 
2,875,317
 
 
 
2,870,016
 
 
 
2,818,414
 

Russell
    Investments US Inst’l Holdco, Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan (10/20)
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
1.00
%
 
 
8.13
%
 
6/2/2025
 
 
5,590,662
 
 
 
5,565,048
 
 
 
5,499,813
 

RV
    Retailer LLC
 
Automotive
 
Term
    Loan
 
Loan
 
3M
    USD SOFR+ 3.75 %
 
 
0.75
%
 
 
8.55
%
 
2/8/2028
 
 
2,957,631
 
 
 
2,912,519
 
 
 
2,516,441
 

Ryan
    Specialty Group LLC
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan
 
Loan
 
1M
    USD SOFR+ 3.00 %
 
 
0.75
%
 
 
7.72
%
 
9/1/2027
 
 
1,478,623
 
 
 
1,467,543
 
 
 
1,474,010
 

S&S
    HOLDINGS LLC
 
Services:
    Business
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 5.00 %
 
 
0.50
%
 
 
9.83
%
 
3/10/2028
 
 
2,458,719
 
 
 
2,409,819
 
 
 
2,349,625
 

 


S-37
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments

February 28, 2023
 



Issuer
    Name
 
Industry
 
Asset
    Name
 
Asset
    
    Type
 
Reference
    Rate/Spread
 
SOFR/
    LIBOR Floor
 
 
Current
    Rate (All In)
 
 
Maturity
    Date
 
Principal/
    Number of Shares
 
 
Cost
 
 
Fair
    Value
 

Sally
    Holdings LLC
 
Retail
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 2.50 %
 
 
0.00
%
 
 
7.06
%
 
3/24/2030
 
 
500,000
 
 
 
496,250
 
 
 
498,750
 

Samsonite
    International S.A.
 
Consumer
    goods: Non-durable
 
Term
    Loan B2
 
Loan
 
1M
    USD LIBOR+ 3.00 %
 
 
0.75
%
 
 
7.63
%
 
4/25/2025
 
 
927,537
 
 
 
914,134
 
 
 
927,537
 

Schweitzer-Mauduit
    International, Inc.
 
High
    Tech Industries
 
Term
    Loan B
 
Loan
 
1M
    USD LIBOR+ 3.75 %
 
 
0.75
%
 
 
8.44
%
 
4/20/2028
 
 
2,955,000
 
 
 
2,942,014
 
 
 
2,895,900
 

Scientific
    Games Holdings LP
 
Hotel,
    Gaming & Leisure
 
Term
    Loan B
 
Loan
 
3M
    USD SOFR+ 3.50 %
 
 
0.50
%
 
 
8.10
%
 
4/4/2029
 
 
498,750
 
 
 
497,703
 
 
 
489,942
 

Sedgwick
    Claims Management Services, Inc.
 
Services:
    Business
 
Term
    Loan B 2/23
 
Loan
 
1M
    USD SOFR+ 3.75 %
 
 
0.00
%
 
 
8.32
%
 
2/17/2028
 
 
1,000,000
 
 
 
990,000
 
 
 
987,500
 

SETANTA
    AIRCRAFT LEASING DAC
 
Aerospace
    & Defense
 
Term
    Loan
 
Loan
 
3M
    USD LIBOR+ 2.00 %
 
 
0.00
%
 
 
6.73
%
 
11/2/2028
 
 
1,000,000
 
 
 
998,000
 
 
 
991,250
 

Signify
    Health, LLC
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan B (6/21)
 
Loan
 
3M
    USD LIBOR+ 3.00 %
 
 
0.50
%
 
 
7.73
%
 
6/16/2028
 
 
493,750
 
 
 
491,846
 
 
 
493,750
 

Sitel
    Worldwide Corporation
 
Services:
    Business
 
USD
    Term Loan (7/21)
 
Loan
 
1M
    USD LIBOR+ 3.75 %
 
 
0.50
%
 
 
8.39
%
 
8/28/2028
 
 
1,975,000
 
 
 
1,967,031
 
 
 
1,966,982
 

SiteOne
    Landscape Supply, LLC
 
Services:
    Business
 
Term
    Loan (3/21)
 
Loan
 
1M
    USD LIBOR+ 2.00 %
 
 
0.50
%
 
 
6.64
%
 
3/18/2028
 
 
777,852
 
 
 
776,450
 
 
 
774,609
 

SMG
    US Midco 2, Inc.
 
Services:
    Business
 
Term
    Loan (01/20)
 
Loan
 
3M
    USD LIBOR+ 2.50 %
 
 
0.00
%
 
 
7.33
%
 
1/23/2025
 
 
485,000
 
 
 
485,000
 
 
 
479,243
 

Smyrna
    Ready Mix Concrete, LLC
 
Construction
    & Building
 
Term
    Loan
 
Loan
 
1M
    USD SOFR+ 4.25 %
 
 
0.50
%
 
 
8.97
%
 
4/2/2029
 
 
1,000,000
 
 
 
992,500
 
 
 
995,000
 

Solis
    IV B.V.
 
Consumer
    goods: Durable
 
Term
    Loan B-1
 
Loan
 
3M
    USD SOFR+ 3.50 %
 
 
0.50
%
 
 
8.37
%
 
2/26/2029
 
 
1,994,987
 
 
 
1,724,963
 
 
 
1,826,132
 

Sotheby’s
 
Services:
    Business
 
Term
    Loan (7/21)
 
Loan
 
3M
    USD LIBOR+ 4.50 %
 
 
0.50
%
 
 
9.33
%
 
1/15/2027
 
 
3,223,744
 
 
 
3,183,482
 
 
 
3,209,237
 

Sparta
    U.S. HoldCo LLC
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan (04/21)
 
Loan
 
1M
    USD LIBOR+ 3.25 %
 
 
0.75
%
 
 
7.82
%
 
8/2/2028
 
 
1,980,000
 
 
 
1,972,123
 
 
 
1,964,160
 

Specialty
    Pharma III Inc.
 
Services:
    Business
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 4.25 %
 
 
0.75
%
 
 
8.88
%
 
3/31/2028
 
 
1,975,000
 
 
 
1,959,930
 
 
 
1,821,938
 

Spectrum
    Brands, Inc.
 
Consumer
    goods: Durable
 
Term
    Loan (2/21)
 
Loan
 
3M
    USD LIBOR+ 2.00 %
 
 
0.50
%
 
 
6.96
%
 
3/3/2028
 
 
491,250
 
 
 
490,363
 
 
 
487,158
 

Spin
    Holdco, Inc.
 
Services:
    Consumer
 
Term
    Loan 3/21
 
Loan
 
3M
    USD LIBOR+ 4.00 %
 
 
0.75
%
 
 
8.77
%
 
3/4/2028
 
 
2,947,500
 
 
 
2,935,211
 
 
 
2,475,487
 

Spirit
    Aerosystems Inc.
 
Aerospace
    & Defense
 
Term
    Loan (11/22)
 
Loan
 
3M
    USD SOFR+ 4.50 %
 
 
0.50
%
 
 
9.18
%
 
1/14/2027
 
 
498,750
 
 
 
484,414
 
 
 
498,541
 

SRAM,
    LLC
 
Consumer
    goods: Durable
 
Term
    Loan (05/21)
 
Loan
 
1M
    USD LIBOR+ 2.75 %
 
 
0.50
%
 
 
7.38
%
 
5/12/2028
 
 
2,709,091
 
 
 
2,705,948
 
 
 
2,682,000
 

SS&C
    Technologies, Inc.
 
Services:
    Business
 
Term
    Loan B3
 
Loan
 
1M
    USD LIBOR+ 1.75 %
 
 
0.00
%
 
 
6.38
%
 
4/16/2025
 
 
167,061
 
 
 
166,987
 
 
 
166,678
 

SS&C
    Technologies, Inc.
 
Services:
    Business
 
Term
    Loan B4
 
Loan
 
1M
    USD LIBOR+ 1.75 %
 
 
0.00
%
 
 
6.38
%
 
4/16/2025
 
 
148,146
 
 
 
148,083
 
 
 
147,807
 

SS&C
    Technologies, Inc.
 
Services:
    Business
 
Term
    Loan B-5
 
Loan
 
1M
    USD LIBOR+ 1.75 %
 
 
0.00
%
 
 
6.38
%
 
4/16/2025
 
 
458,152
 
 
 
457,773
 
 
 
457,199
 

STANDARD
    INDUSTRIES INC.
 
Construction
    & Building
 
Term
    Loan B
 
Loan
 
6M
    USD LIBOR+ 2.25 %
 
 
0.50
%
 
 
6.43
%
 
9/22/2028
 
 
630,250
 
 
 
625,240
 
 
 
628,032
 

Staples,
    Inc.
 
Wholesale
 
Term
    Loan (03/19)
 
Loan
 
3M
    USD LIBOR+ 5.00 %
 
 
0.00
%
 
 
9.81
%
 
4/16/2026
 
 
4,341,357
 
 
 
4,246,081
 
 
 
4,013,802
 

Storable,
    Inc
 
High
    Tech Industries
 
Term
    Loan B
 
Loan
 
3M
    USD SOFR+ 3.50 %
 
 
0.50
%
 
 
8.08
%
 
4/17/2028
 
 
495,000
 
 
 
494,153
 
 
 
482,318
 

Summit
    Materials, LLC
 
Metals
    & Mining
 
Term
    Loan B (12/22)
 
Loan
 
3M
    USD SOFR+ 3.00 %
 
 
0.00
%
 
 
7.61
%
 
12/13/2027
 
 
250,000
 
 
 
247,640
 
 
 
249,583
 

Superannuation
    & Investments US LLC
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 3.75 %
 
 
0.50
%
 
 
8.38
%
 
12/1/2028
 
 
990,000
 
 
 
981,648
 
 
 
984,515
 

Sweetwater
    Borrower, LLC
 
Retail
 
Term
    Loan (8/21)
 
Loan
 
1M
    USD LIBOR+ 4.25 %
 
 
0.75
%
 
 
8.94
%
 
8/2/2028
 
 
2,000,000
 
 
 
1,905,968
 
 
 
1,880,000
 

 


S-38
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments

February 28, 2023
 



Issuer
    Name
 
Industry
 
Asset
    Name
 
Asset
    
    Type
 
Reference
    Rate/Spread
 
SOFR/
    LIBOR Floor
 
 
Current
    Rate (All In)
 
 
Maturity
    Date
 
Principal/
    Number of Shares
 
 
Cost
 
 
Fair
    Value
 

Syncsort
    Incorporated
 
High
    Tech Industries
 
Term
    Loan B (10/21)
 
Loan
 
3M
    USD LIBOR+ 4.00 %
 
 
0.75
%
 
 
8.82
%
 
4/24/2028
 
 
2,469,987
 
 
 
2,468,993
 
 
 
2,243,984
 

Ta
    TT Buyer LLC
 
Media:
    Broadcasting & Subscription
 
Term
    Loan 3/22
 
Loan
 
6M
    USD SOFR+ 5.00 %
 
 
0.50
%
 
 
8.98
%
 
4/2/2029
 
 
997,500
 
 
 
988,507
 
 
 
982,538
 

Tenable
    Holdings, Inc.
 
Services:
    Business
 
Term
    Loan B (6/21)
 
Loan
 
3M
    USD LIBOR+ 2.75 %
 
 
0.50
%
 
 
7.58
%
 
7/7/2028
 
 
990,000
 
 
 
988,026
 
 
 
980,922
 

Teneo
    Holdings LLC
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan
 
Loan
 
1M
    USD SOFR+ 5.25 %
 
 
1.00
%
 
 
9.97
%
 
7/15/2025
 
 
4,383,217
 
 
 
4,330,652
 
 
 
4,322,948
 

Ten-X,
    LLC
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 4.00 %
 
 
1.00
%
 
 
8.63
%
 
9/27/2024
 
 
1,900,000
 
 
 
1,899,296
 
 
 
1,819,250
 

The
    Dun & Bradstreet Corporation
 
Services:
    Business
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 3.25 %
 
 
0.00
%
 
 
7.85
%
 
1/18/2029
 
 
248,125
 
 
 
246,554
 
 
 
246,636
 

The
    Dun & Bradstreet Corporation
 
Services:
    Business
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 3.25 %
 
 
0.00
%
 
 
7.87
%
 
2/6/2026
 
 
962,949
 
 
 
962,285
 
 
 
960,021
 

THE
    KNOT WORLDWIDE INC.
 
Services:
    Consumer
 
Term
    Loan (1/22)
 
Loan
 
1M
    USD SOFR+ 4.50 %
 
 
0.00
%
 
 
9.22
%
 
12/19/2025
 
 
4,845,447
 
 
 
4,840,970
 
 
 
4,833,333
 

Thor
    Industries, Inc.
 
Automotive
 
USD
    Term Loan (3/21)
 
Loan
 
1M
    USD LIBOR+ 3.00 %
 
 
0.00
%
 
 
7.69
%
 
2/1/2026
 
 
2,015,823
 
 
 
1,990,264
 
 
 
2,004,494
 

Torrid
    LLC
 
Wholesale
 
Term
    Loan 5/21
 
Loan
 
3M
    USD LIBOR+ 5.50 %
 
 
0.75
%
 
 
10.31
%
 
6/14/2028
 
 
2,978,835
 
 
 
2,540,024
 
 
 
2,529,031
 

TORY
    BURCH LLC
 
Retail
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.50
%
 
 
8.13
%
 
4/15/2028
 
 
1,329,211
 
 
 
1,232,469
 
 
 
1,268,147
 

Tosca
    Services, LLC
 
Containers,
    Packaging & Glass
 
Term
    Loan (2/21)
 
Loan
 
1M
    USD SOFR+ 3.50 %
 
 
0.75
%
 
 
8.23
%
 
8/18/2027
 
 
490,000
 
 
 
485,078
 
 
 
383,180
 

Trans
    Union LLC
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 2.25 %
 
 
0.50
%
 
 
6.88
%
 
12/1/2028
 
 
796,452
 
 
 
794,928
 
 
 
791,203
 

Transdigm,
    Inc.
 
Aerospace
    & Defense
 
Term
    Loan H
 
Loan
 
3M
    USD SOFR+ 3.25 %
 
 
0.00
%
 
 
7.83
%
 
2/21/2027
 
 
1,993,370
 
 
 
1,990,666
 
 
 
1,989,941
 

TRITON
    WATER HOLDINGS, INC.
 
Beverage,
    Food & Tobacco
 
Term
    Loan (03/21)
 
Loan
 
3M
    USD LIBOR+ 3.50 %
 
 
0.50
%
 
 
8.23
%
 
3/31/2028
 
 
1,477,502
 
 
 
1,471,933
 
 
 
1,372,422
 

Tronox
    Finance LLC
 
Chemicals,
    Plastics, & Rubber
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 2.25 %
 
 
0.00
%
 
 
6.88
%
 
3/10/2028
 
 
346,923
 
 
 
346,338
 
 
 
340,907
 

TruGreen
    Limited Partnership
 
Services:
    Consumer
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 4.00 %
 
 
0.75
%
 
 
8.63
%
 
10/29/2027
 
 
954,501
 
 
 
949,189
 
 
 
873,368
 

Uber
    Technologies, Inc.
 
Transportation:
    Consumer
 
Term
    Loan B (2/21)
 
Loan
 
3M
    USD LIBOR+ 3.50 %
 
 
0.00
%
 
 
8.45
%
 
2/25/2027
 
 
3,906,277
 
 
 
3,874,854
 
 
 
3,913,620
 

Ultra
    Clean Holdings, Inc.
 
High
    Tech Industries
 
Incremental
    Term Loan 3/21
 
Loan
 
1M
    USD LIBOR+ 3.75 %
 
 
0.00
%
 
 
8.38
%
 
8/27/2025
 
 
820,338
 
 
 
817,776
 
 
 
819,928
 

Unimin
    Corporation
 
Metals
    & Mining
 
Term
    Loan (12/20)
 
Loan
 
3M
    USD LIBOR+ 4.00 %
 
 
1.00
%
 
 
8.78
%
 
7/31/2026
 
 
496,815
 
 
 
476,431
 
 
 
489,984
 

United
    Natural Foods, Inc
 
Beverage,
    Food & Tobacco
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 3.25 %
 
 
0.00
%
 
 
7.98
%
 
10/22/2025
 
 
1,289,967
 
 
 
1,252,901
 
 
 
1,291,309
 

United
    Road Services Inc.
 
Transportation:
    Cargo
 
Term
    Loan (10/17)
 
Loan
 
3M
    USD LIBOR+ 5.75 %
 
 
1.00
%
 
 
10.70
%
 
9/1/2024
 
 
889,180
 
 
 
886,242
 
 
 
465,335
 

Univision
    Communications Inc.
 
Media:
    Broadcasting & Subscription
 
Term
    Loan B (6/21)
 
Loan
 
1M
    USD LIBOR+ 3.25 %
 
 
0.75
%
 
 
7.88
%
 
3/15/2026
 
 
2,446,648
 
 
 
2,441,783
 
 
 
2,426,610
 

Univision
    Communications Inc.
 
Media:
    Broadcasting & Subscription
 
Term
    Loan B (6/22)
 
Loan
 
3M
    USD SOFR+ 4.25 %
 
 
0.50
%
 
 
8.83
%
 
6/25/2029
 
 
248,750
 
 
 
241,881
 
 
 
248,233
 

Utz
    Quality Foods, LLC
 
Beverage,
    Food & Tobacco
 
Term
    Loan B
 
Loan
 
1M
    USD SOFR+ 3.00 %
 
 
0.00
%
 
 
7.73
%
 
1/20/2028
 
 
1,828,465
 
 
 
1,827,288
 
 
 
1,825,046
 

Vaco
    Holdings, LLC
 
Services:
    Business
 
Term
    Loan (01/22)
 
Loan
 
3M
    USD SOFR+ 5.00 %
 
 
0.75
%
 
 
9.73
%
 
1/19/2029
 
 
2,342,210
 
 
 
2,275,198
 
 
 
2,310,989
 

 


S-39
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments

February 28, 2023
 



Issuer
    Name
 
Industry
 
Asset
    Name
 
Asset
    
    Type
 
Reference
    Rate/Spread
 
SOFR/
    LIBOR Floor
 
 
Current
    Rate (All In)
 
 
Maturity
    Date
 
Principal/
    Number of Shares
 
 
Cost
 
 
Fair
    Value
 

Vericast
    Corp.
 
Media:
    Advertising, Printing & Publishing
 
Term
    Loan
 
Loan
 
3M
    USD SOFR+ 7.75 %
 
 
1.00
%
 
 
12.33
%
 
6/15/2026
 
 
1,201,006
 
 
 
1,199,817
 
 
 
939,787
 

Verifone
    Systems, Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan (7/18)
 
Loan
 
3M
    USD LIBOR+ 4.00 %
 
 
0.00
%
 
 
8.96
%
 
8/20/2025
 
 
1,368,031
 
 
 
1,364,137
 
 
 
1,269,875
 

Vertex
    Aerospace Services Corp
 
Aerospace
    & Defense
 
Term
    Loan (10/21)
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.75
%
 
 
8.13
%
 
12/6/2028
 
 
992,500
 
 
 
988,789
 
 
 
987,895
 

VFH
    Parent LLC
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan (01/22)
 
Loan
 
1M
    USD SOFR+ 3.00 %
 
 
0.50
%
 
 
7.66
%
 
1/12/2029
 
 
3,069,879
 
 
 
3,063,097
 
 
 
3,036,111
 

Viasat
    Inc
 
Telecommunications
 
Term
    Loan (2/22)
 
Loan
 
1M
    USD SOFR+ 4.50 %
 
 
0.50
%
 
 
9.23
%
 
3/2/2029
 
 
1,994,987
 
 
 
1,948,951
 
 
 
1,967,137
 

Virtus
    Investment Partners, Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B (9/21)
 
Loan
 
1M
    USD LIBOR+ 2.25 %
 
 
0.00
%
 
 
6.85
%
 
9/28/2028
 
 
2,853,409
 
 
 
2,845,646
 
 
 
2,834,377
 

Vistra
    Energy Corp
 
Utilities:
    Electric
 
2018
    Incremental Term Loan
 
Loan
 
1M
    USD LIBOR+ 1.75 %
 
 
0.00
%
 
 
6.38
%
 
12/31/2025
 
 
897,014
 
 
 
896,802
 
 
 
895,023
 

Vizient,
    Inc
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan 4/22
 
Loan
 
1M
    USD SOFR+ 2.25 %
 
 
0.50
%
 
 
6.91
%
 
5/16/2029
 
 
497,500
 
 
 
492,868
 
 
 
496,525
 

VM
    Consolidated, Inc.
 
Construction
    & Building
 
Term
    Loan B (3/21)
 
Loan
 
1M
    USD LIBOR+ 3.25 %
 
 
0.00
%
 
 
7.88
%
 
3/24/2028
 
 
2,185,087
 
 
 
2,183,095
 
 
 
2,180,170
 

Vouvray
    US Finance LLC
 
High
    Tech Industries
 
Term
    Loan
 
Loan
 
1M
    USD SOFR+ 6.00 %
 
 
1.00
%
 
 
10.62
%
 
9/9/2025
 
 
471,250
 
 
 
471,250
 
 
 
442,386
 

Walker
    & Dunlop, Inc.
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan B (12/22)
 
Loan
 
1M
    USD SOFR+ 3.00 %
 
 
0.50
%
 
 
7.72
%
 
12/15/2028
 
 
500,000
 
 
 
490,249
 
 
 
496,250
 

Warner
    Music Group Corp. (WMG Acquisition Corp.)
 
Hotel,
    Gaming & Leisure
 
Term
    Loan Incremental (11/22)
 
Loan
 
1M
    USD SOFR+ 3.00 %
 
 
0.50
%
 
 
7.62
%
 
1/19/2028
 
 
500,000
 
 
 
490,562
 
 
 
498,960
 

Warner
    Music Group Corp. (WMG Acquisition Corp.)
 
Hotel,
    Gaming & Leisure
 
Term
    Loan G
 
Loan
 
1M
    USD LIBOR+ 2.13 %
 
 
0.00
%
 
 
6.76
%
 
1/20/2028
 
 
1,250,000
 
 
 
1,249,851
 
 
 
1,243,750
 

Watlow
    Electric Manufacturing Company
 
High
    Tech Industries
 
Term
    Loan B
 
Loan
 
3M
    USD SOFR+ 3.75 %
 
 
0.50
%
 
 
8.69
%
 
3/2/2028
 
 
2,456,250
 
 
 
2,447,468
 
 
 
2,417,368
 

West
    Corporation
 
Telecommunications
 
Term
    Loan B-3
 
Loan
 
3M
    USD SOFR+ 4.00 %
 
 
1.00
%
 
 
8.93
%
 
4/9/2027
 
 
1,189,119
 
 
 
1,172,865
 
 
 
1,044,939
 

WEX
    Inc.
 
Services:
    Business
 
Term
    Loan B (3/21)
 
Loan
 
1M
    USD LIBOR+ 2.25 %
 
 
0.00
%
 
 
6.88
%
 
3/31/2028
 
 
2,954,924
 
 
 
2,946,492
 
 
 
2,944,582
 

WildBrain
    Ltd.
 
Media:
    Diversified & Production
 
Term
    Loan
 
Loan
 
1M
    USD SOFR+ 4.25 %
 
 
0.75
%
 
 
8.98
%
 
3/27/2028
 
 
1,965,000
 
 
 
1,935,307
 
 
 
1,864,903
 

Xperi
    Corporation
 
High
    Tech Industries
 
Term
    Loan
 
Loan
 
1M
    USD LIBOR+ 3.50 %
 
 
0.00
%
 
 
8.13
%
 
6/8/2028
 
 
2,427,446
 
 
 
2,420,580
 
 
 
2,388,752
 

Zayo
    Group, LLC
 
Telecommunications
 
Term
    Loan 4/22
 
Loan
 
1M
    USD SOFR+ 4.25 %
 
 
0.50
%
 
 
8.87
%
 
3/9/2027
 
 
992,500
 
 
 
971,029
 
 
 
842,027
 

ZEBRA
    BUYER (Allspring) LLC
 
Banking,
    Finance, Insurance & Real Estate
 
Term
    Loan 4/21
 
Loan
 
3M
    USD LIBOR+ 3.00 %
 
 
0.50
%
 
 
7.75
%
 
11/1/2028
 
 
880,444
 
 
 
876,985
 
 
 
874,941
 

Zekelman
    Industries, Inc.
 
Metals
    & Mining
 
Term
    Loan (01/20)
 
Loan
 
3M
    USD LIBOR+ 2.00 %
 
 
0.00
%
 
 
6.73
%
 
1/25/2027
 
 
961,471
 
 
 
961,471
 
 
 
948,251
 

Zest
    Acquisition Corp.
 
Healthcare
    & Pharmaceuticals
 
Term
    Loan (1/23)
 
Loan
 
1M
    USD SOFR+ 5.50 %
 
 
0.00
%
 
 
10.07
%
 
1/31/2028
 
 
2,000,000
 
 
 
1,901,512
 
 
 
1,928,340
 

Zodiac
    Pool Solutions
 
Consumer
    goods: Durable
 
Term
    Loan (1/22)
 
Loan
 
1M
    USD SOFR+ 2.00 %
 
 
0.50
%
 
 
6.72
%
 
1/29/2029
 
 
495,000
 
 
 
494,015
 
 
 
490,192
 

TOTAL INVESTMENTS 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
645,599,001
 
 
$
605,954,468
 

 


S-40
 

 
Saratoga Investment Corp. CLO 2013-1, Ltd.
Schedule of Investments

February 28, 2023
 


  
Number of Shares  
Cost  
Fair Value 

Cash and cash equivalents 
    
    
   

U.S. Bank Money Market (c) 
 23,776,950  
$23,776,950  
$23,776,950 

Total cash and cash equivalents 
 23,776,950  
$23,776,950  
$23,776,950 

 

 
 

(a)All or a portion of this investment has an unfunded commitment
as of February 28, 2023.


(b)As of February 28, 2023, the investment was in default and on
non-accrual status.


(c)Included within cash and cash equivalents in Saratoga CLO’s
Statements of Assets and Liabilities as of February 28, 2023.


(d)Investments include Payment-in-Kind Interest.

 
LIBOR - London Interbank Offered Rate
SOFR - Secured Overnight Financing Rate
 
1M USD LIBOR - The 1-month USD LIBOR rate as
of February 28, 2023 was 4.67%.
3M USD LIBOR - The 3-month USD LIBOR rate as
of February 28, 2023 was 4.97%.
6M USD LIBOR - The 6-month USD LIBOR rate as
of February 28, 2023 was 5.26%.
1M SOFR - The 1-month SOFR rate as of February
28, 2023 was 4.66%.
3M SOFR - The 3-month SOFR rate as of February
28, 2023 was 4.89%.
6M SOFR - The 6-month SOFR rate as of February
28, 2023 was 5.15%.
 
Prime—The Prime Rate as of February 28, 2023 was 7.75%.
 
See accompanying notes to financial statements.
 


S-41
 

 
SARATOGA INVESTMENT CORP. CLO 2013-1, LTD.
 
NOTES TO FINANCIAL STATEMENTS
 
1. Organization and Purpose
 
Saratoga Investment Corp. CLO 2013-1, Ltd. (the
“Issuer”, “we”, “our”, “us”, “CLO” or “Saratoga CLO”), an exempted
company with limited liability incorporated under the laws of the Cayman Islands was formed on November 28, 2007 and commenced operations
on January 22, 2008. The Issuer was established to acquire or participate in U.S. dollar-denominated corporate debt obligations. The “Company”
refers to Saratoga Investment Corp.
 
On January 22, 2008, the Issuer issued $400.0
million of notes, consisting of Class A Floating Rate Senior Notes, Class B Floating Rate Senior Notes, Class C Deferrable Floating Rate
Notes, Class D Deferrable Floating Rate Notes, Class E Deferrable Floating Rate Notes (collectively the “Secured Notes”),
and Subordinated Notes. The notes were issued pursuant to an indenture, dated January 22, 2008 (the “Indenture”), with U.S.
Bank National Association (the “Trustee”) servicing as the Trustee thereunder.
 
On October 17, 2013, in a refinancing transaction,
the Issuer issued $284.9 million of notes (the “2013-1 CLO Notes”), consisting of Class X Floating Rate Senior Notes, Class
A-1 Floating Rate Senior Notes, Class A-2 Floating Rate Senior Notes, Class B Floating Rate Senior Notes, Class C Deferrable Floating
Rate Notes, Class D Deferrable Floating Rate Notes, Class E Deferrable Floating Rate Notes, and Class F Deferrable Floating Rate Notes.
The 2013-1 CLO Notes were issued pursuant to the Indenture with the same Trustee. Proceeds of the issuance of the 2013-1 CLO Notes were
used, along with existing assets held by the Trustee, to redeem all of the Secured Notes issued in 2008.
 
On November 15, 2016, in a refinancing
transaction, the Issuer issued $282.4 million of notes (the “2013-1 Amended
CLO Notes”), consisting of Class A-1 Floating Rate Senior Notes, Class A-2 Floating Rate Senior Notes, Class B Floating Rate
Senior Notes, Class C Deferrable Floating Rate Notes, Class D Deferrable Floating Rate Notes, Class E Deferrable Floating Rate
Notes, and Class F Deferrable Floating Rate Notes. The 2013-1 Amended CLO Notes were issued pursuant to the Indenture with the same
Trustee. Proceeds of the issuance of the 2013-1 Amended CLO Notes were used, along with existing assets held by the Trustee, to
redeem all of the 2013-1 CLO Notes issued in 2013. 
 
On December 14, 2018, in a refinancing transaction,
the Issuer issued $509.5 million of notes (the “2013-1 Reset CLO Notes”), consisting of Class A-1FL-R-2 Floating Rate Senior
Notes, Class A-1FXD-R-2 Fixed Rate Senior Notes, Class A-2-R-2 Floating Rate Senior Notes, Class B-R-2 Floating Rate Senior Notes, Class
C-R-2 Deferrable Mezzanine Floating Rate Notes, Class D-R-2 Deferrable Mezzanine Floating Rate Notes, Class E-1-R-2 Deferrable Mezzanine
Floating Rate Notes, Class F-R-2 Deferrable Junior Floating Rate Notes, Class G-R-2 Deferrable Junior Floating Rate Notes, and Subordinated
Notes. The 2013-1 Reset CLO Notes were issued pursuant to the Indenture with the same Trustee. Proceeds of the issuance of the 2013-1
Reset CLO Notes were used along with existing assets held by the Trustee to redeem all of the Secured Notes issued in 2016.
 
On February 26, 2021, in a refinancing transaction,
the Issuer issued $722.0 million of notes consisting of Class A-1-R-3 Senior Secured Floating Rate Notes (“Class A-1-R-3 Notes”),
Class A-2-R-3 Senior Secured Floating Rate Notes (“Class A-2-R-3 Notes”), Class B-FL-R-3 Senior Secured Floating Rate Notes
(“Class B-FL-R-3 Notes”), Class B-FXD-R-3 Senior Secured Fixed Rate Notes (“Class B-FXD-R-3 Notes”), Class C-FL-R-3
Deferrable Mezzanine Floating Rate Notes (“Class C-FL-R-3 Notes”), Class C-FXD-R-3 Deferrable Mezzanine Fixed Rate Notes (“Class
C-FXD-R-3 Notes”), Class D-R-3 Deferrable Mezzanine Floating Rate Notes (“Class D-R-3 Notes”), Class E-R-3 Deferrable
Mezzanine Floating Rate Notes (Class E-R-3 Notes”), Class F-R-3 Deferrable Junior Floating Rate Notes (Class F-R-3 Notes”),
and Subordinated Notes. The Class D-R-3 Notes, Class E-R-c Notes and Subordinated Notes were issued at a discount, which is being amortized
over the term of the notes. Proceeds net of issue discounts were used along with existing trust assets to redeem all of the rated note
classes of the 2013-1 Reset CLO Notes. $69.5 million of Subordinated Notes issued in connection with the 2008 CLO Notes, 2013-1 CLO Notes,
2013-1 Amended CLO Notes and 2013-1 CLO Reset Notes were not redeemed and remained outstanding.
 


S-42
 

 
On August 9, 2021, the Company exchanged its existing
$17.9 million Class F-R-3 Notes for $8.5 million Class F-1-R-3 Notes and $9.4 million Class F-2-R-3 Notes at par as a non cash transaction.
On August 11, 2021, the Company sold its Class F-1-R-3 Notes to third parties, resulting in a realized loss of $0.1 million.
 
Pursuant to an investment management agreement (the “Investment Management
Agreement”), Saratoga Investment Corp. (the “Investment Manager”), provides investment management services to the Issuer,
and makes day-to-day investment decisions concerning the assets of the Issuer. The Investment Manager also performs certain administrative
services on behalf of the Issuer under the Investment Management Agreement. The CLO is both managed by and a wholly owned subsidiary of
Saratoga Investment Corp.
 

2. Significant Accounting Policies
 
Basis of Presentation
 
The accompanying financial statements have been
prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and are stated in U.S. dollars. The
following is a summary of the significant accounting policies followed by the Issuer in the preparation of its financial statements.
 
The Issuer is considered to be an investment company
for financial reporting purposes and has applied the guidance in accordance with the Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) Topic 946, Financial Services—Investment Companies. There has been
no change to the Issuer’s status as an investment company during the year ended February 29, 2024.
 
Use of Estimates
 
The preparation of the financial statements in
conformity with U.S. GAAP requires the Investment Manager to make estimates and assumptions that affect the amounts of assets and liabilities
reported and disclosed at the date of the financial statements, including the fair value of investments, and the amounts of income and
expenses during the reporting period. Actual results could differ from these estimates and such differences could be material.
 
Cash and Cash Equivalents
 
The Issuer defines cash and cash equivalents as
highly-liquid financial instruments with original maturities of three months or less. Cash and cash equivalents may include investments
in money market mutual funds, which are carried at fair value. At February 29, 2024 and February 28, 2023, cash and cash equivalents amounted
to $12.1 million and $23.8 million, respectively, and are swept on an overnight basis into a U.S. Bank money market deposit account held
at the Trustee.
 
Valuation of Investments
 
The Issuer accounts for its investments at fair
value in accordance with the FASB ASC Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value, establishes
a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and
enhances disclosure requirements for fair value measurements. ASC 820 requires the Issuer to assume that its investments are to be sold
at the statement of assets and liabilities date in the principal market to independent market participants, or in the absence of a principal
market, in the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in
the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.
 
Investments for which market quotations are readily
available are fair valued at such market quotations obtained from independent third-party pricing services and market makers subject to
any decision by the Investment Manager to approve a fair value determination to reflect significant events affecting the value of these
investments. The Investment Manager values investments for which market quotations are not readily available at fair value. Determinations
of fair value may involve significant judgments and estimates. The types of factors that may be considered in determining the fair value
of investments include the nature and realizable value of any collateral, the portfolio company’s ability to make payments, market
yield trend analysis, the markets in which the portfolio company does business, comparison to publicly traded companies, discounted cash
flow and other relevant factors.
 


S-43
 

 
Because such valuations, and particularly valuations
of private investments and private companies, are inherently uncertain, they may fluctuate over short periods of time and may be based
on estimates. The determination of fair value may differ materially from the values that would have been used if a ready market for these
investments existed. Our net asset value could be materially affected if the determinations regarding the fair value of our investments
were materially higher or lower than the values that are ultimately realized upon the disposal of such investments.
 
Investment Transactions and Income Recognition
 
Purchases and sales of investments and the related
realized gains or losses are recorded on a trade-date basis. Interest income, adjusted for amortization of premium and accretion of discount,
is recorded on an accrual basis to the extent that such amounts are expected to be collected. Discounts and premiums on investments purchased
are accreted/amortized over the life of the respective investment using the effective yield method. The amortized cost of investments
represents the original cost adjusted for the accretion of discounts and amortizations of premium on investments.
 
Loans are generally placed on non-accrual status when there is reasonable
doubt that principal or interest will be collected. The Issuer stops accruing interest on its investments when it is determined that interest
is no longer collectible, with all outstanding accrued interest reserved immediately. Interest payments received on non-accrual loans
may be recognized as a reduction in principal depending upon the Investment Manager’s judgment regarding collectability. Non-accrual
loans are restored to accrual status when past due principal and interest are paid and, in management’s judgment, are likely to
remain current, although we may make exceptions to this general rule if the loan has sufficient collateral value and is in the process
of collection. The Issuer elected not to measure an allowance for credit losses for accrued interest receivables. At February 29, 2024
and February 28, 2023 we had two and three investments that were on non-accrual status, which we established a reserve of $0.6 million
and $0.2 million, respectively, against interest receivable related to portfolio companies that were on non-accrual status and will be
written off in a timely manner.
 

Payment-in-Kind Interest
 
The Issuer holds debt investments in its portfolio
that contain a payment-in-kind (“PIK”) interest provision. The PIK interest, which represents contractually deferred interest
added to the investment balance that is generally due at maturity, is generally recorded on the accrual basis to the extent such amounts
are expected to be collected. We stop accruing PIK interest if we do not expect the issuer to be able to pay all principal and interest
when due. For the years ended February 29, 2024, February 28, 2023 and February 28, 2022 we recorded $0.3 million, $0.2 million and $0.6
in PIK interest.
 
Deferred Debt Financing Costs, net
 
The Issuer presents deferred debt financing costs
on the balance sheet as a contra-liability as a direct deduction from the carrying amount of that debt liability, consistent with debt
discounts.
 
As of February 29, 2020, included in deferred
debt financing costs of $2.3 million, are structuring fees of the investment bank, rating agency and legal fees, and other various closing
costs associated with the issuance of the 2013-1 Reset CLO Notes on December 14, 2018. Such costs have been capitalized and amortized
using an effective yield method, as appropriate, over the life of the related notes.
 
New debt financing costs of $2.3 million were
incurred with the issuance of the 2013-1 2021 Reset CLO Notes on February 26, 2021. These costs consist of structuring fees of the investment
bank, rating agency and legal fees, and other various closing costs. Of that amount, $1.8 million has been capitalized and amortized using
an effective yield method, as appropriate, over the life of the related notes.
 


S-44
 

 
Management Fees
 
The Issuer is externally managed by the Investment
Manager pursuant to the Investment Management Agreement. As compensation for the performance of its obligations under the Investment Management
Agreement, the Investment Manager is entitled to receive from the Issuer a base management fee (the “Base Management Fee”),
a subordinated management fee (the “Subordinated Management Fee”) and an incentive management fee (the “Incentive Management
Fee”). The Base Management Fee is payable in arrears quarterly (subject to availability of funds and to the satisfaction of payment
obligations on the debt obligations of the Issuer (the “Priority of Payments”)) and prior to the second refinancing and the
issuance of the 2013-1 Amended CLO Notes, was payable in an amount equal to 0.25% per annum of the fee basis amount at the beginning of
the Collection Period. The Subordinated Management Fee is payable in arrears quarterly (subject to availability of funds and to the Priority
of Payments) and prior to the second refinancing and the issuance of the 2013-1 Amended CLO Notes, was payable in an amount equal to 0.25%
per annum of the fee basis amount at the beginning of the Collection Period. Subsequent to the second refinancing and the issuance of
the 2013-1 Amended CLO Notes, the Base Management Fee was changed to be payable in an amount equal to 0.10% per annum of the fee basis
amount at the beginning of the Collection Period, and the Subordinated Management Fees was changed to be payable in an amount equal to
0.40% per annum of the fee basis amount at the beginning of the Collection Period. This remained unchanged during the third refinancing
and the issuance of the 2013-1 Reset CLO Notes, as well as the fourth refinancing and issuance of the 2013-1 2021 Reset CLO Notes.
 
Prior to the third refinancing of the CLO, the
Incentive Management Fee equaled 20.0% of the remaining interest proceeds and principal proceeds, if any, after the Subordinated Notes
have realized the Incentive Management Fee target return of 12.0%, in accordance with the Priority of Payments after making the prior
distributions on the relevant payment date. The Investment Manager is no longer eligible to receive the Incentive Management Fee following
the third refinancing of the CLO on December 14, 2018.
 
Expenses
 
The Issuer bears its own organizational and offering
expenses, all expenses related to its investment program and expenses incurred in connection with its operations including, but not limited
to, external legal, administrative, trustee, accounting, tax and audit expenses, costs related to trading, acquiring, monitoring or disposing
of investments of the Issuer, and interest and other borrowing expenses, expenses of preparing and distributing reports, financial statements,
and litigation or other extraordinary expenses. The Issuer has retained the Trustee to provide trustee services. Additionally, the Trustee
performs loan administration, debt covenant compliance calculations, and monitoring and reporting services. For the years ended February
29, 2024, February 28, 2023 and February 28, 2022, the Issuer paid $0.3 million, $0.3 million and $0.3 million, respectively, for trustee
services provided and is included on the statements of operations.
 
Interest Expense
 
The Issuer has issued rated and unrated notes
to finance its operations. Interest on debt is calculated by the Trustee for the Issuer. Interest is accrued and generally paid quarterly.
For the years ended February 29, 2024, February 28, 2023 and February 28, 2022, $6.9 million, $4.9 million and $5.2 million of payments
to the Subordinated Notes were included in interest and debt financing expenses on the statements of operations, respectively. For the
years ended February 29, 2024 and February 28, 2023 and February 28, 2022, $4.4 million, $4.4 million and $4.4 million, respectively,
in discount amortization related to the Subordinated Notes is also included in interest and debt financing expenses on the Issuer’s
statements of operations and statements of cash flows.
 
Risk Management
 
In the ordinary course of its business, the Issuer
manages a variety of risks, including market risk and credit risk. Market risk is the risk of potential adverse changes to the value of
investments because of changes in market conditions such as interest rate movements and volatility in investment prices.
 
Credit risk is the risk of default or non-performance
by portfolio companies, equivalent to the investment’s carrying amount.
 
The Issuer is also exposed to credit risk related
to maintaining all of its cash and cash equivalents, including those in reserve accounts, at a major financial institution.
 
The Issuer has investments in lower rated and
comparable quality unrated high yield bonds and bank loans. Investments in high yield investments are accompanied by a greater degree
of credit risk. The risk of loss due to default by the issuer is significantly greater for holders of high yield securities, because such
investments are generally unsecured and are often subordinated to other creditors of the issuer.
 


S-45
 

 
New Accounting Pronouncements
 
In June 2022, the FASB issued Accounting Standards
Update (“ASU”) 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820)
(“ASU 2022-03”), which clarifies that a contractual sale restriction prohibiting the sale of an equity security is a characteristic
of the reporting entity holding the equity security and is not included in the equity security’s unit of account. Accordingly, an
entity should not consider the contractual sale restriction when measuring the equity security’s fair value. In addition, ASU 2022-03
prohibits an entity from recognizing a contractual sale restriction as a separate unit of account. ASU 2022-03’s amendments are
effective for fiscal years beginning after December 15, 2023, with early adoption permitted. We are currently evaluating the impact of
the adoption of ASU 2022-03 on our consolidated financial statements.
 
In March 2020, the FASB issued Reference
Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) to
provide optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial
reporting. ASU 2020-04 established Topic 848 to provide relief during the temporary transition period and includes a sunset provision
based on expectations of when the London Interbank Offered Rate (“LIBOR”) would cease being published. In December 2022, the
FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which deferred the sunset
day of this guidance to December 31, 2024. With the adoption of ASU 2022-06, there was no significant impact to our consolidated financial
position.
 
In December 2023, the FASB issued ASU 2023-09, Improvements
to Income Tax Disclosures. The amendments in this update require more disaggregated information on income taxes paid. ASU 2023-09
is effective for years beginning after December 15, 2024. Early adoption is permitted, however the Company has not elected to adopt this
provision as of the date of the financial statements contained in this report. The Company is still assessing the impact of the new guidance.
However, it does not expect ASU 2023-09 to have a material impact on the consolidated financial statements and the notes thereto.
 
3. Fair Value Measurements
 
As noted above, the Issuer values all investments
in accordance with ASC 820. ASC 820 requires enhanced disclosures about assets and liabilities that are measured and reported at fair
value. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
 
ASC 820 establishes a hierarchal disclosure framework
which prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Market price
observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment.
Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally
will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
 
Based on the observability of the inputs used
in the valuation techniques, the Issuer is required to provide disclosures on fair value measurements according to the fair value hierarchy.
The fair value hierarchy ranks the observability of the inputs used to determine fair values. Investments carried at fair value are classified
and disclosed in one of the following three categories:
 


 
●
Level 1— Valuations based on quoted prices in active markets for identical assets or liabilities that the Issuer has the ability to access.

 


 
●
Level 2— Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. Such inputs may be quoted prices for similar assets or liabilities, quoted markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full character of the financial instrument, or inputs that are derived principally from, or corroborated by, observable market information. Investments which are generally included in this category include illiquid debt securities and less liquid, privately held or restricted equity securities, for which some level of recent trading activity has been observed.

 


 
●
Level 3— Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs may be based on the Company’s own assumptions about how market participants would price the asset or liability or may use Level 2 inputs, as adjusted, to reflect specific investment attributes relative to a broader market assumption. These inputs into the determination of fair value may require significant management judgment or estimation. Even if observable market data for comparable performance or valuation measures (earnings multiples, discount rates, other financial/valuation ratios, etc.) are available, such investments are grouped as Level 3 if any significant data point that is not also market observable (private company earnings, cash flows, etc.) is used in the valuation methodology.

 


S-46
 

 
In addition to using the above inputs in investment
valuations, the Issuer continues to employ the valuation policy that is consistent with ASC 820 and the Investment Company Act of 1940,
as amended (“1940 Act”).
 
The following table presents fair value measurements
of investments, by major class, as of February 29, 2024, according to the fair value hierarchy:
 


  
Fair Value Measurements 

  
Level 1  
Level 2  
Level 3  
Total 

Term loans 
$     -  
$544,194,304  
$62,336,885  
$606,531,189 

Equity interests 
 -  
 44,587  
 975,998  
 1,020,585 

Total 
$-  
$544,238,891  
$63,312,883  
$607,551,774 

 
The following table presents fair value measurements of investments,
by major class, as of February 28, 2023, according to the fair value hierarchy:
 


  
Fair Value Measurements 

  
Level 1  
Level 2  
Level 3  
Total 

Term loans 
$        -  
$541,492,510  
$64,461,958  
$605,954,468 

Total 
$-  
$541,492,510  
$64,461,958  
$605,954,468 

 

 


Transfers into or out of Level 1, 2 or 3 are recognized at the reporting date.                
 
The following table provides a reconciliation of the beginning
and ending balances for investments that use Level 3 inputs for the year ended February 29, 2024:
 


  
First Lien Term Loan  
Equity Interests  
Total 

Balance as of February 28, 2023 
$64,461,958  
$-  
$64,461,958 

Payment-in-kind and other adjustments to cost 
 -  
 -  
 - 

Net accretion of discount on investments 
 76,065  
 -  
 76,065 

Net change in unrealized appreciation (depreciation) on
    investments 
 851,630  
 (673,988) 
 177,642 

Purchases 
 16,586,078  
 1,649,986  
 18,236,064 

Sales and repayments 
 (8,762,524) 
 -  
 (8,762,524)

Net realized loss from investments 
 (361,041) 
 -  
 (361,041)

Transfers in (1) 
 29,342,250  
 -  
 29,342,250 

Transfers out (2) 
 (39,857,531) 
 -  
 (39,857,531)

Balance as of February 29, 2024 
$62,336,885  
$975,998  
$63,312,883 

Net change in unrealized depreciation for the year relating to those Level 3 assets that were still held by the Issuer at the end of the year 
$(145,844) 
$(673,988) 
$(819,832)

 

 


(1)The Issuer’s investment in Level 3 investments were classified
as such during the year ended February 29, 2024, as market quotes for these investments are only provided by one trading desk.


(2)The Issuer’s investment in Level 2 investments were classified
as such during the year ended February 29, 2024, as the number of observable market quotes for these investments increased.

 


S-47
 

 
The following table provides a reconciliation of the beginning
and ending balances for investments that use Level 3 inputs for the year ended February 28, 2023:
 


  
Term Loans  
Equity Interests  
Total 

Balance as of February 28, 2022 
$69,474,664  
$          -  
$69,474,664 

Payment-in-kind and other adjustments to cost 
 -  
 -  
 - 

Net accretion of discount on investments 
 97,816  
 -  
 97,816 

Net change in unrealized depreciation on investments 
 (633,895) 
 -  
 (633,895)

Purchases 
 15,870,770  
 -  
 15,870,770 

Sales and repayments 
 (9,192,436) 
 -  
 (9,192,436)

Net realized loss from investments 
 (38,093) 
 -  
 (38,093)

Transfers in (1) 
 19,263,898  
 -  
 19,263,898 

Transfers out (2) 
 (30,380,766) 
 -  
 (30,380,766)

Balance as of February 28, 2023 
$64,461,958  
$-  
$64,461,958 

Net change in unrealized depreciation for the year relating to those Level 3 assets that were still held by the Issuer at the end of the year 
$(975,369) 
$-  
$(975,369)

 
 


(1)The Issuer’s investment in Level 3 investments were classified
as such during the year ended February 28, 2023, as market quotes for these investments are only provided by one trading desk.


(2)The Issuer’s investment in Level 2 investments were classified
as such during the year ended February 28, 2023, as the number of observable market quotes for these investments increased.

 
Purchases and other adjustments to cost
include purchases of new investments at cost, effects of refinancing/restructuring, accretion/amortization of income from
discount/premium on debt securities, and PIK.
 
Sales and repayments represent net proceeds received
from investments sold and principal paydowns received, during the period.
 
Significant unobservable inputs used in the fair
value measurement of the Level 3 term loans and equity include market quotations available from multiple dealers. A significant increase
(decrease) in the market quote, in isolation, would result in a significantly lower (higher) fair value measurement.
 
The valuation techniques and significant unobservable inputs
used in recurring Level 3 fair value measurements of assets as of February 29, 2024 were as follows:
 


  
Fair Value  
Valuation Technique 
Unobservable Inputs 
Range (Weighted Average)*

Term loans 
$62,336,885  
Market Comparables 
Third-Party Bid 
67.50 - 101.25 (96.49)

Equity interests 
 975,998  
Market Comparables 
Third-Party Bid 
9.75% - 19.24% (15.78%)

Total 
$63,312,883  
  
  
 

 
The valuation techniques and significant unobservable inputs
used in recurring Level 3 fair value measurements of assets as of February 28, 2023 were as follows:
 



  
Fair Value  
Valuation Technique 
Unobservable Inputs 
Range
(Weighted Average)* 

Term loans 
$64,461,958  
Market Comparables 
Third-Party Bid 
 82.00 - 100.00 (96.68)  

Total 
$64,461,958  
  
  
   

 
 


*Weighted average represents the arithmetic average of the
inputs and is not weighted by the relative fair value or notional amount.

 


S-48
 

 
4. Financing 
 
On January 22, 2008, the Issuer issued $400.0 million
of notes, consisting of Class A Floating Rate Senior Notes, Class B Floating Rate Senior Notes, Class C Deferrable Floating
Rate Notes, Class D Deferrable Floating Rate Notes, Class E Deferrable Floating Rate Notes (collectively the “Secured
Notes”), and Subordinated Notes. The notes were issued pursuant to the Indenture.
 
The Secured Notes are limited recourse obligations
of the Issuer. The Subordinated Notes are unsecured, limited recourse debt obligations of the Issuer.
 
On February 26, 2021, in a refinancing transaction,
the Issuer issued $722.0 million of notes consisting of Class A-1-R-3 Senior Secured Floating Rate Notes, Class A-2-R-3 Senior Secured
Floating Rate Notes, Class B-FL-R-3 Senior Secured Floating Rate Notes, Class B-FXD-R-3 Senior Secured Fixed Rate Notes, Class C-FL-R-3
Deferrable Mezzanine Floating Rate Notes, Class C-FXD-R-3 Deferrable Mezzanine Fixed Rate Notes, Class D-R-3 Deferrable Mezzanine Floating
Rate Notes, Class E-R-3 Deferrable Mezzanine Floating Rate Notes, Class F-R-3 Deferrable Junior Floating Rate Notes, and Subordinated
Notes. Proceeds net of issue discounts were used along with existing trust assets to redeem all of the rated note classes of the 2013-1
Reset CLO Notes. $69.5 million of Subordinated Notes issued in connection with the 2008 CLO Notes, 2013-1 CLO Notes, 2013-1 Amended CLO
Notes and 2013-1 CLO Reset Notes were not redeemed and remained outstanding. On August 9, 2021, the Company exchanged its existing $17.9
million Class F-R-3 Notes for $8.5 million Class F-1-R-3 Notes and $9.4 million Class F-2-R-3 Notes at par.
 
The 2013-1 2021 Reset CLO Notes are limited recourse
obligations of the Issuer. The Subordinated Notes are unsecured, limited recourse debt obligations of the Issuer.
 
The relative order of seniority of payment of
each class of securities is as follows: first, Class A-1-R- 3 Notes, second, Class A-2-R-3 Notes, third Class B-FL-R-3 Notes, fourth,
Class B-FXD-R-3 Notes, fifth, Class C-FL-R-3 Notes, sixth, Class C-FXD-R-3 Notes, seventh, Class D-R-3 Notes, eighth, Class E-R-3 Notes,
ninth, Class F-1-R-3 Notes, Class F-2-R-3 Notes, and tenth the Subordinated Notes, with (a) each class of securities (other than the
Subordinated Notes) in such list being senior to each other class of securities that follows such class of securities in such list and
(b) each class of securities in such list being subordinate to each other class of securities that precedes such class of securities
in such list. The Subordinated Notes are subordinated to the 2013-1 2021 Reset CLO Notes and are entitled to periodic payments from interest
proceeds available in accordance with the Priority of Payments.
 
The table below sets forth certain information for each outstanding
class of notes issued, pursuant to the loan agreements and Indenture at February 29, 2024.
 


Description
 
Interest Rate
 
Maturity
 
Principal Amount
 
 
Amount 
Outstanding
 
 
Weighted Average
Interest Rate
 

Saratoga Investment Corp. CLO 2013-1, Ltd. Notes:
 
 
 
 
 
 
 
 
 
 
 
 
 

Class A-1-R-3 Senior Secured Floating Rate Notes
 
3M SOFR + 1.32%
 
April 20, 2033
 
$
357,500,000
 
 
$
357,500,000
 
 
 
6.82
%

Class A-2-R-3 Senior Secured Floating Rate Notes
 
3M SOFR + 1.65%
 
April 20, 2033
 
 
65,000,000
 
 
 
65,000,000
 
 
 
7.05
%

Class B-FL-R-3 Senior Secured Floating Rate Notes
 
3M SOFR + 1.80%
 
April 20, 2033
 
 
60,500,000
 
 
 
60,500,000
 
 
 
7.19
%

Class B-FXD-R-3 Senior Secured Fixed Rate Notes
 
2.54%
 
April 20, 2033
 
 
11,000,000
 
 
 
11,000,000
 
 
 
2.60
%

Class C-FL-R-3 Deferrable Mezzanine Floating Rate Notes
 
3M SOFR + 2.40%
 
April 20, 2033
 
 
26,000,000
 
 
 
26,000,000
 
 
 
7.78
%

Class C-FXD-R-3 Deferrable Mezzanine Fixed Rate Notes
 
3.31%
 
April 20, 2033
 
 
6,500,000
 
 
 
6,500,000
 
 
 
3.39
%

Class D-R-3 Deferrable Mezzanine Floating Rate Notes
 
3M SOFR + 4.00%
 
April 20, 2033
 
 
39,000,000
 
 
 
39,000,000
 
 
 
9.34
%

Class E-R-3 Deferrable Mezzanine Floating Rate Notes
 
3M SOFR + 7.50%
 
April 20, 2033
 
 
27,625,000
 
 
 
27,625,000
 
 
 
12.75
%

Class F-1-R-3 Notes Deferrable Junior Floating Rate Notes
 
3M SOFR + 10.00%
 
April 20, 2033
 
 
8,500,000
 
 
 
8,500,000
 
 
 
15.19
%

Class F-2-R-3 Notes Deferrable Junior Floating Rate Notes
 
3M SOFR + 10.00%
 
April 20, 2033
 
 
9,375,000
 
 
 
9,375,000
 
 
 
15.19
%

Subordinated Notes
 
N/A
 
April 20, 2033
 
 
111,000,000
 
 
 
111,000,000
 
 
 
N/A
 

 
 
 
 
 
 
$
722,000,000
 
 
$
722,000,000
 
 
 
 
 

 


S-49
 

 
The table below sets forth certain information for each outstanding
class of notes issued, pursuant to the loan agreements and Indenture at February 28, 2023.
 


Description 
Interest Rate  
Maturity 
Principal Amount  
Amount  Outstanding  
Weighted Average Interest Rate 

Saratoga Investment Corp. CLO 2013-1, Ltd. Notes: 
   
  
   
   
  

Class A-1-R-3 Senior Secured Floating Rate Notes 
 LIBOR
+ 1.32% 
April 20, 2033 
$357,500,000  
$357,500,000  
 1.61%

Class A-2-R-3 Senior Secured Floating Rate Notes 
 LIBOR
+ 1.65% 
April 20, 2033 
 65,000,000  
 65,000,000  
 1.95%

Class B-FL-R-3 Senior Secured Floating Rate Notes 
 LIBOR
+ 1.80% 
April 20, 2033 
 60,500,000  
 60,500,000  
 2.11%

Class B-FXD-R-3 Senior Secured Fixed Rate Notes 
 2.54% 
April 20, 2033 
 11,000,000  
 11,000,000  
 2.67%

Class C-FL-R-3 Deferrable Mezzanine Floating Rate Notes 
 LIBOR
+ 2.40% 
April 20, 2033 
 26,000,000  
 26,000,000  
 2.72%

Class C-FXD-R-3 Deferrable Mezzanine Fixed Rate Notes 
 3.31% 
April 20, 2033 
 6,500,000  
 6,500,000  
 3.48%

Class D-R-3 Deferrable Mezzanine Floating Rate Notes 
 LIBOR
+ 4.00% 
April 20, 2033 
 39,000,000  
 39,000,000  
 4.36%

Class E-R-3 Deferrable Mezzanine Floating Rate Notes 
 LIBOR
+ 7.50% 
April 20, 2033 
 27,625,000  
 27,625,000  
 7.95%

Class F-1-R-3 Notes Deferrable Junior Floating Rate Notes 
 LIBOR
+ 10.00% 
April 20, 2033 
 8,500,000  
 8,500,000  
 10.52%

Class F-2-R-3 Notes Deferrable Junior Floating Rate Notes 
 LIBOR + 10.00% 
April 20, 2033 
 9,375,000  
 9,375,000  
 10.52%

Subordinated Notes 
 N/A  
April 20, 2033 
 111,000,000  
 111,000,000  
 N/A 

  
    
  
$722,000,000  
$722,000,000  
   

 
The following table shows the fair value of the Issuer’s
debt outstanding as of February 29, 2024(a):
 


Debt Security 
February 29, 2024 

Saratoga Investment Corp. CLO 2013-1, Ltd. Notes: 
  

Class A-1-R-3 Senior Secured Floating Rate Notes 
$359,983,909 

Class A-2-R-3 Senior Secured Floating Rate Notes 
 65,676,594 

Class B-FL-R-3 Senior Secured Floating Rate Notes 
 61,141,020 

Class B-FXD-R-3 Senior Secured Fixed Rate Notes 
 11,006,154 

Class C-FL-R-3 Deferrable Mezzanine Floating Rate Notes 
 26,295,629 

Class C-FXD-R-3 Deferrable Mezzanine Fixed Rate Notes 
 6,505,936 

Class D-R-3 Deferrable Mezzanine Floating Rate Notes 
 39,532,812 

Class E-R-3 Deferrable Mezzanine Floating Rate Notes 
 28,169,374 

Class F-1-R-3 Notes Deferrable Junior Floating Rate Notes 
 8,564,667 

Class F-2-R-3 Notes Deferrable Junior Floating Rate Notes 
 8,875,227 

Subordinated Notes 
 9,500,627 

  
$625,251,949 

 

 



(a)
These notes are fair valued based on a discounted cash flow model, specifically using Intex cash flow models, to form the basis for the valuation and would be classified as Level 3 liabilities within the fair value hierarchy.

 


S-50
 

 
The
following table shows each outstanding class of notes issued, pursuant to the Indenture, at fair value at February 28, 2023(a):
 


Debt Security 
February 28,
 2023 

Saratoga Investment Corp. CLO 2013-1, Ltd. Notes: 
  

Class A-1-R-3 Senior Secured Floating Rate Notes 
$359,565,649 

Class A-2-R-3 Senior Secured Floating Rate Notes 
 65,537,373 

Class B-FL-R-3 Senior Secured Floating Rate Notes 
 61,017,654 

Class B-FXD-R-3 Senior Secured Fixed Rate Notes 
 11,009,371 

Class C-FL-R-3 Deferrable Mezzanine Floating Rate Notes 
 26,253,490 

Class C-FXD-R-3 Deferrable Mezzanine Fixed Rate Notes 
 6,508,929 

Class D-R-3 Deferrable Mezzanine Floating Rate Notes 
 39,515,127 

Class E-R-3 Deferrable Mezzanine Floating Rate Notes 
 28,232,871 

Class F-1-R-3 Notes Deferrable Junior Floating Rate Notes 
 8,749,793 

Class F-2-R-3 Notes Deferrable Junior Floating Rate Notes 
 8,831,406 

Subordinated Notes 
 21,176,578 

  
$636,398,241 

 

 
 

(a)These notes are fair valued based on a discounted cash flow
model, specifically using Intex cash flow models, to form the basis for the valuation and would be classified as Level 3 liabilities
within the fair value hierarchy.

 
The Indenture provides that payments on the Subordinated
Notes shall rank subordinate in priority of payment to payments due on all classes of 2013-1 2021 Reset CLO Notes and subordinate in priority
of payment to the payment of fees and expenses. Distributions on the Subordinated Notes are limited to the assets of the Issuer remaining
after payment of all of the liabilities of the Issuer that rank senior in priority of payment to the Subordinated Notes. To the extent
that the proceeds from the collateral are not sufficient to make distributions on the Subordinated Notes the Issuer will have no further
obligation in respect of the Subordinated Notes.
 
Interest proceeds and, after the 2013-1 2021 Reset
CLO Notes have been paid in full, principal proceeds in each case will be distributed to the holders of the Subordinated Notes in accordance
with the Indenture.
 
Distributions, if any, on the Subordinated Notes
will be payable quarterly on the 20th day of each January, April, July and October of each calendar year or, if any such day is not a
business day, on the next succeeding business day (each, a “Payment Date”), commencing on the first Payment Date, and on April
20, 2033 (or if any such day is not a business day, the next succeeding business day) (the “Stated Redemption Date”) (if not
redeemed prior to such date) sequentially in order of seniority. At the Stated Redemption Date, the Subordinated Notes will be redeemed
after payment in full of all of the 2013-1 2021 Reset CLO Notes and the payment of all administrative and other fees and expenses. The
failure to pay interest proceeds or principal proceeds to the holders of the Subordinated Notes will not be an event of default under
the Indenture.
 
As of February 29, 2024, the remaining unamortized
discount on Class A-1-R-3 Notes, Class A-2-R- 3 Notes, Class B-FL-R-3 Notes, Class B-FXD-R-3 Notes, Class C-FL-R-3 Notes, Class C-FXD-R-3
Notes, Class D-R-3 Notes, Class E-R-3 Notes, Class F-1-R-3 Notes and F-2-R-3 were $0.0 million, $0.0 million, $0.0 million, $0.0 million,
$0.0 million, $0.0 million, $0.2 million, $2.3 million, $0.0 million and $0.0 million, respectively.
 
As of February 28, 2023, the remaining unamortized
discount on Class A-1-R-3 Notes, Class A-2-R- 3 Notes, Class B-FL-R-3 Notes, Class B-FXD-R-3 Notes, Class C-FL-R-3 Notes, Class C-FXD-R-3
Notes, Class D-R-3 Notes, Class E-R-3 Notes, Class F-1-R-3 Notes and F-2-R-3 were $0.0 million, $0.0 million, $0.0 million, $0.0 million,
$0.0 million, $0.0 million, $0.2 million, $2.5 million, $0.0 million and $0.0 million, respectively.
 
As of February 29, 2024 and February 28, 2023,
remaining capitalized financing costs of $1.7 million and $1.9 million, respectively, related to the 2013-1 2021 Reset CLO Notes are being
amortized over the term of the 2013-1 2021 Reset CLO Notes.
 


S-51
 

 
5. Income Tax 
 
Under the current laws, the Issuer is not subject
to net income taxation in the United States or the Cayman Islands. Accordingly, no provision for income taxes has been made in the accompanying
financial statements.
 
Pursuant to ASC Topic 740, Accounting for Uncertainty
in Income Taxes, the Issuer adopted the provisions of the FASB relating to accounting for uncertainty in income taxes which clarifies
the accounting for income taxes by prescribing the minimum recognition threshold a tax position must meet before being recognized in the
financial statements and applies to all open tax years as of the effective date. The Investment Manager has analyzed such tax positions
for uncertain tax positions for tax years that may be open (2019—2022). The Issuer identifies its major tax jurisdictions as U.S.
Federal, state and foreign jurisdictions where the Issuer makes investments. As of February 29, 2024 and February 28, 2023, there was
no impact to the financial statements as a result of the Issuer’s accounting for uncertainty in income taxes. The Issuer does not
have any unrecognized tax benefits or liabilities for the years ended February 29, 2024, February 28, 2023 and February 28, 2022. Also,
the Issuer recognizes interest and, if applicable, penalties for any uncertain tax positions, as a component of income tax expense. No
interest or penalty expense was recorded by the Issuer for the years ended February 29, 2024, February 28, 2023 and February 28, 2022.
 
6. Commitments and Contingencies
 
In the ordinary course of its business, the Issuer
may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution
of these provisions against the Issuer. Based on its history and experience, the Investment Manager feels that the likelihood of such
an event is remote. Therefore, the Issuer has not accrued any liabilities in connection with such indemnifications.
 
In the ordinary course of business, the Issuer
may directly or indirectly be a defendant or plaintiff in legal actions with respect to bankruptcy, insolvency or other types of proceedings.
Such lawsuits may involve claims that could adversely affect the value of certain financial instruments owned by the Issuer. As of February
29, 2024 and February 28, 2023, the Issuer is not subject to any material legal proceedings. Therefore, the Issuer has not accrued any
liabilities in connection with such indemnifications.
 
The terms of Collateralized Debt Investments may
require the Issuer to provide funding for any unfunded portion of a Collateralized Debt Investment at the request of the borrower. At
February 29, 2024 and February 28, 2023, the Issuer had $0.0 million and $1.9 million of unfunded commitments outstanding, respectively.
 
7. Related Party Transactions
 
In the ordinary course of business and as permitted
per the terms of the Indenture, the Issuer may acquire or sell investments to or from related parties at the fair value at such time.
For the years ended February 29, 2024, February 28, 2023 and February 28, 2022, the Issuer neither bought nor sold investments from related
parties.
 
The Subordinated Notes are wholly owned by the
Investment Manager. The Subordinated Notes do not have a stated coupon rate but are entitled to residual cash flows from the CLO’s
investments after all of the other tranches of debt and certain other fees and expenses are paid. For the years ended February 29, 2024,
February 28, 2023 and February 28, 2022, $6.9 million, $4.9 million and $5.2 million of payments to the Subordinated Notes were included
in interest and debt financing expenses in the statements of operations, respectively. For the years ended February 29, 2024, February
28, 2023 and February 28, 2022, $4.4 million, $4.4 million and $4.4 million, respectively, in discount amortization related to the Subordinated
Notes is also included in interest and debt financing expenses on the Issuer’s statements of operations and statements of cash flows.
 
The Investment Manager holds aggregate principal
amounts of $9.4 million in Class F-2-R-3 Notes of the CLO tranches with a coupon of LIBOR plus 10.00% at February 29, 2024 and February
28, 2023. For the years ended February 29, 2024, February 28, 2023 and February 28, 2022, payments for the Class F-2-R-3 Notes totaling
$1.5 million, $1.2 million and $0.5 million, respectively, are included in interest and debt financing expenses in the Issuer’s
statements of operations. Expenses relating to the refinancing were paid for by the Company on behalf of Saratoga CLO and are included
in due to affiliate on the statements of assets and liabilities at February 28, 2021 and were subsequently repaid during fiscal year 2022.
 
In addition, as of February 29, 2024 and February
28, 2023, $0.01 million and $0.0 million, respectively, is included in due from affiliate are amounts reimbursable to Saratoga CLO for
shared operating expenses with a related party.
 


S-52
 

 
8. Shareholders’ Capital
 
Capital contributions and distributions shall
be made at such time and in such amounts as determined by the Investment Manager and the Indenture.
 
The majority holder of the Subordinated Notes
has various control rights over the CLO, including the ability to call the CLO prior to its legal maturity, replace the Investment Manager
under certain circumstances, and refinance any of the outstanding debt tranches. The voting structure of the Subordinated Notes may require
either majority or unanimous approval depending upon the issue.
 
The authorized share capital of the Issuer consists
of 50,000 ordinary shares, 250 of which are owned by Maples Finance Limited and are held under the terms of a declaration of trust.
 
As of February 29, 2024 and February 28, 2023,
net assets (deficit) were $(71.5) million and $(70.6) million, respectively. These amounts include accumulated losses of $71.5 million
and $70.6 million, respectively, which include cumulative net investment income or loss, cumulative amounts of gains and losses realized
from investment transactions, net unrealized appreciation or depreciation of investments, as well as the cumulative effect of accounting
mismatches between investments accounted for at fair value and amortized cost or accrual-basis assets and liabilities as discussed in
Significant Accounting Policies, above. The Issuer’s investments continue to generate sufficient liquidity to satisfy its obligations
on periodic payment dates as well as comply with all performance criteria as of the statements of assets and liabilities date.
 
The Issuer adopted Rule 3-04/Rule 8-03(a)(5) under
Regulation S-X. Pursuant to the regulation, the Issuer has presented a reconciliation of the changes in each significant caption of stockholders’
equity for each of the three fiscal years ended February 29, 2024, February 28, 2023 and February 28, 2022, as shown in the tables below:
 


  
For the Year Ended February 29, 2024 

  
   
   
  
Total  
  

  
   
Capital
in Excess  
Distributable
Earnings  
Net Assets 

  
Common Stock  
of Par Value  
 (Loss)  
(Deficit) 

Balance at February 28, 2023 
 250  
$250  
$       -  
$(70,627,170) 
$(70,626,920)

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 502,662  
 502,662 

Net realized gain (loss) from investments 
 -  
 -  
 -  
 (2,108,567) 
 (2,108,567)

Net change in unrealized depreciation on investments 
 -  
 -  
 -  
 (10,337,238) 
 (10,337,238)

Balance at May 31, 2023 
 250  
 250  
 -  
 (82,570,313) 
 (82,570,063)

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 168,515  
 168,515 

Net realized gain (loss) from investments 
 -  
 -  
 -  
 (641,267) 
 (641,267)

Net change in unrealized appreciation on investments 
 -  
 -  
 -  
 13,352,743  
 13,352,743 

Balance at August 31, 2023 
 250  
 250  
 -  
 (69,690,322) 
 (69,690,072)

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 359,637  
 359,637 

Net realized gain (loss) from investments 
 -  
 -  
 -  
 (6,298,909) 
 (6,298,909)

Net change in unrealized depreciation on investments 
 -  
 -  
 -  
 (313,230) 
 (313,230)

Balance at November 30, 2023 
 250  
 250  
 -  
 (75,942,824) 
 (75,942,574)

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 498,467  
 498,467 

Net realized gain (loss) from investments 
 -  
 -  
 -  
 (9,532,208) 
 (9,532,208)

Net change in unrealized appreciation on investments 
 -  
 -  
 -  
 13,498,322  
 13,498,322 

Balance at February 29, 2024 
 250  
$250  
 -  
$(71,478,243) 
$(71,477,993)

 


S-53
 

 


  
For the Year Ended February 28, 2023 

  
   
   
  
Total  
  

  
Common Stock  
Capital
in Excess  
Distributable
Earnings  
Net Assets 

  
Shares  
Amount  
of Par Value  
 (Loss)  
(Deficit) 

Balance at February 28, 2022 
 250  
$250  
$       -  
$(37,197,733) 
$(37,197,483)

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment loss 
 -  
 -  
 -  
 (286,724) 
 (286,724)

Net realized gain (loss) from investments 
 -  
 -  
 -  
 77,656  
 77,656 

Net change in unrealized depreciation on investments 
 -  
 -  
 -  
 (24,681,988) 
 (24,681,988)

Balance at May 31, 2022 
 250  
 250  
 -  
 (62,088,789) 
 (62,088,539)

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment loss 
 -  
 -  
 -  
 (507,279) 
 (507,279)

Net realized gain (loss) from investments 
 -  
 -  
 -  
 (1,144,858) 
 (1,144,858)

Net change in unrealized depreciation on investments 
 -  
 -  
 -  
 (1,544,463) 
 (1,544,463)

Balance at August 31, 2022 
 250  
 250  
 -  
 (65,285,389) 
 (65,285,139)

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 586,193  
 586,193 

Net realized gain (loss) from investments 
 -  
 -  
 -  
 (532,640) 
 (532,640)

Net change in unrealized depreciation on investments 
 -  
 -  
 -  
 (10,640,311) 
 (10,640,311)

Balance at November 30, 2022 
 250  
 250  
 -  
 (75,872,147) 
 (75,871,897)

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 1,031,538  
 1,031,538 

Net realized gain (loss) from investments 
 -  
 -  
 -  
 (7,086,473) 
 (7,086,473)

Net change in unrealized appreciation on investments 
 -  
 -  
 -  
 11,299,912  
 11,299,912 

Balance at February 28, 2023 
 250  
$250  
-  
$(70,627,170) 
$(70,626,920)

 


  
For the Year Ended February 28, 2022 

  
   
   
  
Total  
  

  
Common Stock  
Capital
in Excess  
Distributable
Earnings  
Net Assets 

  
Shares  
Amount  
of Par Value  
 (Loss)  
(Deficit) 

Balance at February 28, 2021 
 250  
$250  
$       -  
$(28,538,114) 
$(28,537,864)

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 2,315,511  
 2,315,511 

Net realized gain (loss) from investments 
 -  
 -  
 -  
 (565,094) 
 (565,094)

Net change in unrealized depreciation on investments 
 -  
 -  
 -  
 (481,097) 
 (481,097)

Balance at May 31, 2021 
 250  
 250  
 -  
 (27,268,794) 
 (27,268,544)

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 1,397,282  
 1,397,282 

Net realized gain (loss) from investments 
 -  
 -  
 -  
 175,669  
 175,669 

Net change in unrealized depreciation on investments 
 -  
 -  
 -  
 (662,095) 
 (662,095)

Balance at August 31, 2021 
 250  
 250  
 -  
 (26,357,938) 
 (26,357,688)

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment loss 
 -  
 -  
 -  
 (647,430) 
 (647,430)

Net realized gain (loss) from investments 
 -  
 -  
 -  
 (662,289) 
 (662,289)

Net change in unrealized depreciation on investments 
 -  
 -  
 -  
 (4,277,923) 
 (4,277,923)

Balance at November 30, 2021 
 250  
 250  
 -  
 (31,945,580) 
 (31,945,330)

Increase (Decrease) from Operations: 
    
    
    
    
   

Net investment income 
 -  
 -  
 -  
 168,313  
 168,313 

Net realized gain (loss) from investments 
 -  
 -  
 -  
 (12,099) 
 (12,099)

Net change in unrealized depreciation on investments 
 -  
 -  
 -  
 (5,408,367) 
 (5,408,367)

Balance at February 28, 2022 
 250  
$250  
$-  
$(37,197,733) 
$(37,197,483)

 


S-54
 

 
9. Financial Highlights 
 
The following is a schedule of financial highlights for the
years ended February 29, 2024, February 28, 2023, February 28, 2022, February 28, 2021 and February 29, 2020:
 


 
 
 
February 29,
2024(4)
 
February 28,
2023
 
February 28,
2022
 
February 28,
2021
 
February 29,
2020
 

Year-end subordinated notes’ capital balance(1)
 
 
$
3,356,769
 
$
242,477
 
$
28,742,295
 
$
34,422,474
 
$
11,498,257
 

Ratio and supplemental data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Total return(2)
 
 
 
NM
 
 
(94.53)
%
 
(9.75
%
 
150.86
%
 
(46.85)
%

Net investment income (loss)(3)
 
 
 
NM
 
 
8.77
%
 
9.38
%
 
(17.12
)%
 
0.01
%

Total expenses(3)
 
 
 
NM
 
 
655.20
%
 
81.89
%
 
383.67
%
 
156.62
%

Base management fee(3)
 
 
 
NM
 
 
10.08
%
 
1.89
%
 
6.60
%
 
2.48
%

Subordinated management fee(3)
 
 
 
NM
 
 
40.30
%
 
7.57
%
 
26.42
%
 
9.93
%


 
 


(1)Subordinated notes’ capital balance is calculated based on
the sum of the subordinated notes outstanding amount and total net assets, net of ordinary equity.


(2)Total return is calculated based on a time-weighted rate of return
methodology, in which quarterly rates of return are compounded to derive the total return reflected above. Total return is calculated
for the subordinated notes’ capital taken as a whole and assumes the purchase of the subordinated notes’ capital on the first
day of the period and the sale of the last day of the period.


(3)Calculated based on the average subordinated notes’ capital
balance.

(4)The Investment Manager has deemed the total return
                                                                     and other ratios to be not meaningful (“NM”) for the year ended February 29, 2024. As the total of the subordinated notes
                                                                     and retained earnings balance was negative at certain times during the year, the time-weighted rate of return methodology can result
                                                                     in misleading returns. With average capital balances during the year being negative, the other ratios can be misleading as well and
                                                                     therefore not meaningful.

 
10. Subsequent Events 
 
The Investment Manager has evaluated events or
transactions that have occurred since February 29, 2024 through May 6, 2024, the date the financial statements were available for issuance.
The Investment Manager has determined that there are no material events that would require the disclosure in the financial statements.
 


S-55

 
 


42

















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